In case you missed it, there was a brief crash in the S&P 500 yesterday afternoon following a report of a terrorist attack on the White House. There was no such attack, of course; it turned out that the Twitter feed for the Associated Press had been hacked. But the news was alarming enough to send the S&P down by more than a thousand points and temporarily erase $136 billion in value from the index.
The whole thing was over with very quickly, with the AP announcing the hack and the markets returning to normal within three minutes. The S&P finished the day up 1 percent overall. But the incident pointed up how precarious our markets are in these days of instant computerized trading.
There was a similar situation involving Google’s stock on Monday. Somehow automatic trading systems triggered a sell signal, and the stock lost 3 percent of its value – dropping by 21 points – in an instant, then popped right back up to its previous level. The whole episode was over in less than three quarters of a second. No one is quite sure what caused that crash.
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