Markets Worry About The Influence Of Tweets

twitter-hacked

On Tuesday, A fake tweet, from the hacked Associated Press twitter account indicating that President Obama was injured during an explosion at the White house, caused the industrial average of Dow Jones to have a temporary drop of 150 points thus erasing $136 billion in market value. While the markets recovered in just minutes, the incident has caused worries in mixing social media with high-frequency trading.

Apparently, the Securities and Exchange Commission decided in the past to allow companies and executives to use social media sites such as Twitter and Facebook to announce market-moving news. The New York Times reports that on Tuesday, Commodity Futures Trading Commission plans to organize a public meeting in Washington together with numerous high frequency traders so they can talk about security measures against social media’s effect on the market.

The New York Times explains that though the market quickly rebounded on Tuesday, there were some investors that lost money, however, those who bet during the quick decline, made money.

Andrew Frankel, co-president of the brokerage firm Stuart Frankel & Company, explains that the fast recovery was after traders found out that the post was fake since there were no news about the explosion at the White House shown by Bloomberg and CNBC.

Right now, the concern is how to spot a fake tweet. The mere fact that the lost was due to the a hack attack is disconcerting. Mr. Chilton of the commission explains that “We would be irresponsible if we turned a blind eye to these debacles.” via [The New York Times]