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False White House explosion tweet roils market

False White House explosion tweet roils market

A fake tweet from the account of the Associated Press sent stocks tumbling more than 140 points within minutes, erasing all of the day’s gains and then some, before bouncing back just as rapidly.

The erroneous tweet, which was posted around 1:07 p.m. ET, said “BREAKING: Two Explosions in the White House and Barack Obama is injured.” The tweet was up for a few minutes before AP’s account was suspended, and presumably seen by many of AP’s nearly 2 million followers. The tweet was also retweeted by almost 1,500 other Twitter users.

By 1:10 p.m. ET, the Dow was down almost 13 points, or 0.1% on the day. Just prior to the tweet, the blue-chip index had been up about 0.9% for the day. Stocks fully recovered from the plunge a few minutes after hitting the low of the day, as investors realized the tweet had been made by a hacker and was not true.

From its corporate communications account, AP clarified within minutes that the tweet was “bogus” and later elaborate that its account had been hacked and the tweet was fake.

Can someone explain exactly why the Dow falls on news like this?

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All transactions are electronically recorded. So, the index is a relative measure of trading activity that looks at a list of 30 or so big companies. If there is a lot of trading in those, it’s assumed there is market activity in others as well. When the traders were shocked by the news, they likely just stopped doing their job for a bit and the computers registered a complete halt to trades, so the calculated index fell for that interval. People involved in stock activity who are not right there at the exchange would interpret a drop in the Dow… Read more »


People were in shock and stopped trading. When the activity falls, the calculated index follows suit.

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