By Business editor Peter Ryan
Markets live and die on rumours - as the interchangeable saying goes "buy on the rumour, sell on the fact".
But what happened on Wall Street around three hours before the close of trade (3.08am Sydney time) shows how sensitive markets are to rumours that now abound on social media outlets such as Twitter.
A report on a Twitter account managed by The Associated Press wire service said there had been explosions at the White House and that President Obama had been injured.
Investors, clearly sensitive after last week's bombings in Boston, appear to have sold on an unverified report from a reputable source that terrorism had struck again.
The brief panic from the report - immediately denied by the AP - erased around US$130 billion from the Standard & Poor's 500 Index. Market movers like Apple, Exxon-Mobil and Microsoft were caught up in the selling.
However, Wall Street's broad market indicator quickly recovered to end the day more than one percent higher.
Speculation is focusing on computerised trading as a key cause, where "stop loss" orders can be triggered when a certain price threshold is hit.
However, in the world of expanding social media, there are concerns that algorithmic trading programs can be programmed to read news headlines and tweets where key words can spark alerts.
So it's possible that an algorithm - rather than a human - may be responsible for this morning's selloff when the fake AP tweet was retweeted around the world.
The snowball effect - where unverified reports and rumours are often aired without normal checks and balances - shows the world's exposure to social media.
Today's brief plunge is a reminder of the "flash crash" in May 2010 where rolling stop loss orders - rather than a fat-fingered human trader - saw the Dow plunge 1,000 points in a few minutes.
The brave new world of social media will have many investors yearning for the days when human emotion - rather than computers - made decisions that can change lives and manage minds.