DJIA Drops 150 Points In Seconds Due to Fake Tweet

Earlier today, at a few minutes past 1 pm EST, the markets quickly tanked thanks to a fake Tweet that was posted on the Associated Press Twitter feed.

The fake Tweet said this:

"Breaking: Two Explosions in the White House and Barack Obama is injured"

People are especially jittery right now following the Boston marathon bombings, and the markets quickly sold off on the "news".

Prior to the fake Tweet being released, the DJIA (Dow Jones Industrial Average) was at 14,700. Within seconds, the DJIA hit around 14,550 before quickly rebounding.

The NASDAQ dropped from 3,270 to 3,241.50 in just a couple of seconds, while the S&P 500 traded from 1,578 to 1,565.

All three exchanges quickly recovered after it was revealed that the Associated Press' Twitter feed had been hacked and the news regarding the supposed White House bombing was false.

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If the perpetrators of this hack are caught, it will be interesting to hear what their motivations were. Did they financially benefit from the quick collapse in the markets, or were they simply looking to cause some mischief?

If somebody did hack the @AP Twitter feed and post this fake story in order to benefit financially, it wouldn't be the first time that something like this has happened.

In August of 2000, a fake press release was circulated that claimed that a bunch of really bad things (CEO stepping down, earnings being restated, company under investigation by the SEC) were happening to Emulex.

Shares of Emulex traded from $104 to $43 in just 16 minutes, resulting in the loss of billions of dollars of market capitalization. Trading in Emulex was frozen, and it was soon revealed that the press release was a hoax.

The fraud was perpetrated by Mark Jakob, a former employee of a news dissemination company. Jakob made $250,000 in just a couple of minutes, but those gains were short-lived, as Jakob was eventually caught and forced to return his ill-gotten gains to the government. In addition, Jakob had to cough up an additional $100k+ in fines, plus he received a 3 1/2 year trip to the slammer.

Filed under: General Market News