The stock market experienced significant volatility on Monday as investors reacted to a false report about a potential pause in tariffs imposed by President Trump. The S&P 500 saw its biggest intraday swing since March 2020, dropping as much as 4.7 percent before recovering to close with a loss of 0.2 percent. The index ended the day 17.6 percent below its February peak, teetering on the edge of a bear market.
The brief rally was sparked by a misquoted Fox News interview with Kevin Hassett, the director of the National Economic Council. When asked about a possible 90-day pause on new tariffs, Hassett responded vaguely, stating, “I think the president is going to decide what the president is going to decide.”
This comment was quickly transformed into a misleading headline on X (formerly Twitter), suggesting that Trump was considering a tariff pause for all countries except China. The inaccurate report went viral, amplified by accounts with blue verification badges, a paid feature that enhances the reach of a user’s posts.
News organizations, including Reuters and CNBC, reported the unverified claim, causing cheers to erupt on the New York Stock Exchange trading floor as the market rallied.
Stock market swings from false report
However, the White House quickly denied the report, and the news organizations retracted their headlines, blaming the spread of unconfirmed information.
Within ten minutes, the stock market experienced a $2.4 trillion swing, according to Dow Jones Market Data, as investors reacted to the misleading information. Kate Starbird, a disinformation expert at the University of Washington, emphasized the risks posed by social media platforms designed to maximize virality rather than truthfulness. “Our social media systems — and X in particular — are designed in such a way that rumors spread extremely quickly, while corrections lag far behind,” Starbird said.
This incident highlights the significant influence social media can exert on financial markets and the dangers of misinformation. Attempts to reach the person behind the Hammer Capital account, which was among the first to share the inaccurate report, were unsuccessful. The swift and profound impact of this false post on the stock market underscores the need for more robust verification mechanisms and responsible information sharing on social media platforms.
Financial markets and investors must remain vigilant against the spread of misinformation to avoid such volatile swings in the future.
