Fake tweet causes Dow to tumble

The FBI is investigating a fake tweet, which claimed President Obama had been injured in explosions at the White House.

Fake tweet causes Dow to tumble

The FBI is investigating a fake tweet, which claimed President Obama had been injured in explosions at the White House.

The US stock market saw share prices plunge after the account belonging to the Associated Press news agency was apparently hacked.

The account has now been temporarily suspended.

Here is a retweet of the offending fake tweet:

Companies that traditionally do well when the economy is improving led the US market higher yesterday after several of them notched strong earnings – despite the brief stir from the fake Tweet.

Coach, a maker of luxury handbags, and Netflix, which streams TV shows and movies over the internet, were big winners after reporting profits that impressed investors.

Financial stocks rose after Travelers’ earnings beat analysts’ expectations.

The Dow closed up 152.29 points, or 1.05%, at 14,719.46. The S&P 500 ended 16.28 points higher at 1,578.78, a 1% gain. Both indexes are about 1% below their record high closes from nearly two weeks ago.

The Nasdaq composite rose 35.78 points, or 1.1%, to 3,269.33.

The stock market’s surge in 2013 has been led by so-called defensive industries such as health care, consumer staples and utilities.

Investors buy those stocks when they want reliable earnings and regular dividends. Until now, they have been unsure about the strength of the economic recovery and been less enthusiastic about stocks whose fortunes are more closely tied to swings in the US economy.

The Dow Jones industrial average and the Standard & Poor’s 500 index both rose 1%, and rose for a third straight day.

The markets closed higher even after stocks and other markets were shaken in the early afternoon when a fake tweet on the AP’s Twitter account prompted a sudden sell-off.

A posting saying that there had been explosions at the White House and that US president Barack Obama had been injured was sent at 1.08pm local time. The Dow immediately plunged about 143 points, from 14,697 to 14,554. The AP said its Twitter account had been hacked and the posting was fake.

Within five minutes the Dow had snapped back.

AP spokesman Paul Colford said the news co-operative is working with Twitter to investigate the issue. The AP has disabled its other Twitter accounts following the attack, Colford added.

Joe Fox, chairman and co-founder of online brokerage Ditto Trade, was at work in LA when he got a call from the Chicago brokerage offices telling him what had happened. Fox watched the market tanking, and its quick bounceback.

“It was a tipsy-turvy rollercoaster for a few minutes there,” Mr Fox said.

A resurgence in corporate profits after the Great Recession has been one of the drivers that pushed the Dow up 12% and the S&P 500 up 11 % this year. However investors remain unsure how much further earnings can improve without the outlook for growth in the global economy improving as well.

Tuesday’s upturn in stocks put both indexes back in the black for April and closer to the record high closes they reached on April 11. It was a sharp change of tone from last week, when the market had its worst drop since November. That sell-off started after economic growth in China, the world’s second-largest economy, slowed.

So far, 69% of the companies that have reported earnings for the first quarter have beaten analysts’ expectations, better than the 10-year average of 62%, according to data from S&P Capital IQ.

Analysts expect earnings to rise by 2.3 % in the first quarter, slower than the 7.7% growth in the previous three-month period.

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