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Wed April 24, 2013
Fake Tweet Causes Financial Markets To Drop
Originally published on Wed April 24, 2013 7:20 am
DAVID GREENE, BYLINE: Hackers got into the Associated Press's Twitter account yesterday and sent out a fake tweet saying that the White House had been attacked. Though the tweet was discredited very quickly, it created a swift and panicked reaction on the stock market.
Here's NPR's Jim Zarroli.
JIM ZARROLI, BYLINE: The tweet said that a pair of bombs had gone off in the White House and President Obama was injured. Almost instantaneously, the Dow Jones Industrial Average fell 125 points.
Joe Saluzzi of Themis Trading says the dizzying speed with which stocks fell was almost certainly because of widely used high-speed computer trading programs.
JOE SALUZZI: Nowadays, machines or computers can read news. So there's something called machine readable news which is sold to the highest bidder and there are many companies out there doing it, where they sell feeds and the machines read 'em and automatically trade off the news.
ZARROLI: The incident was over almost as soon as it began. Stock prices rebounded and finished the day higher. But Saluzzi, a longtime critic of high speed trading, says the plunge underscores how vulnerable the markets are to this kind of computer program.
SALUZZI: To us, it's just another symptom of a market which has been broken for years.
ZARROLI: Saluzzi says yesterday's incident calls to mind the infamous "flash crash" of May 2010, when the Dow dropped by 9 percent in the space of a few minutes before rebounding. A report from federal regulators later said the crash had been aggravated by high-speed trading programs.
Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.