Fake tweet shakes stocks
NEW YORK — The stock market climbed Tuesday following strong earnings across a range of U.S. industries.
Makers of handbags, jet planes and chemical products all turned in good results for the first quarter, reviving investors' confidence after a sharp downturn in the stock market last week.
Markets swooned briefly shortly after 1 p.m. Eastern time after The Associated Press' Twitter account was hacked and a fake tweet was posted about explosions at the White House.
Trading at Chicago’s CME Group was also affected.
Andrew Busch is publisher of the financial newsletter, the Busch Update.
“What concerns me for Chicago, an account gets hacked and people start putting out misinformation whether it’s about a company, or a police situation or flooding, that’s where things get kind of crazy and people can actually get hurt. Not only people, but companies as well,” he said.
Busch says now officials will be looking for anyone who may have benefited from the sharp turn in trading.
The CME Group declined to comment.
Coach, Lockheed Martin, DuPont and Travelers were among the winners after they reported results that were better than analysts expected. The Dow Jones industrial average and the Standard & Poor's 500 index both rose nearly 1 percent in morning trading, putting them on track for a third straight day of gains.
A resurgence in corporate profits after the Great Recession has been one of the drivers that pushed both the Dow Jones industrial average and the Standard & Poor's 500 index to record levels this year. However investors are starting to question how much further company 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 percent of the companies that reported earnings for the first quarter have beaten analysts' expectations, better than the 10-year average of 62 percent, according to data from S&P Capital IQ. Analysts expect earnings to rise by 2.3 percent in the first quarter, compared with 7.7 percent growth in the previous three-month period.
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 President Barack Obama had been injured was sent at 1:08 p.m. 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 cooperative 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 L.A. when he got a call from the Chicago brokerage offices telling him what had happened. Fox watched the market tanking, then its quick bounce back.
"It was a tipsy-turvy rollercoaster for a few minutes there," Fox said.
Fox said the news didn't sound right to him when he first heard it, and he thinks that traders are being more cautious in the wake of the 2010 "flash crash," which sent the Dow spiraling 600 points in a matter of minutes.
After the brief sell-off investors turned their focus back to earnings.
Netflix soared 24 percent to $216 after reporting a big gain in subscribers in the first quarter late yesterday. Coach, which makes Luxury handbags and other accessories, soared 10 percent to $55.84. Lockheed rose 1.5 percent to $97.30. Travelers rose 2 percent to $86.15.
The Dow was up 139 points at 14,706 as of 3:46 p.m. The S&P 500 was 14 points higher at 1,577. Both indexes are 1 percent below their record high closes from nearly two weeks ago.
The Nasdaq composite rose 33 points to 3,267.
The price of crude oil dropped about 60 cents after the fake tweet, to $88.40 from $89, then quickly recouped that loss. It was up 11 cents at $89.30 in afternoon trading.
The yield on the 10-year Treasury note was 1.70 percent, unchanged from late Monday.
Apple reports earnings after the market closes. Apple has lost 23 percent of its value this year. Investor worry that demand for the iPhone is waning as competitors like Samsung sell more smartphones. It stock was up 1.5 percent at $405.
Susie An contributed to this report.