How a phoney tweet sank $134 billion worth of stocks

Stockhouse Editorial
0 Comments| April 24, 2013

(The Canadian Press) NEW YORK (AP) _ For a few surreal minutes, a mere 12 words on Twitter caused the world's mightiest stock market to tremble.

No sooner did hackers send a false Associated Press tweet reporting explosions at the White House on Tuesday than investors started dumping stocks _ eventually unloading $134 billion worth.

Turns out, some investors are not only gullible, they're impossibly fast stock traders.

Except most of the investors weren't human.

They were computers, selling on autopilot beyond the control of humans, like a scene from a sci-fi horror film.

Markets quickly recovered after Tuesday's plunge. But the incident rattled traders and highlighted the danger of handing control to the machines.

It also raised questions about whether regulators should be doing more to monitor the relationship between social media and the markets.

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