Why fake news is a problem for Wall Street

The story was explosive if true: Google planned to buy Apple for $9 billion, according to a Dow Jones Newswire headline earlier this week. Dow Jones deleted the story after just a few minutes, explaining that it was accidentally published as part of a technology test. And sophisticated stock traders likely didn’t even have enough time to digest the news before it was corrected, much less take any action. Yet that brief bit of fake news was blamed for a minor jump in Apple’s stock price to about $158 a share before falling back to around $155.

But if the headline was too absurd to be believed who was likely momentarily tricked? Bots. An increasing portion of stock trades every day are controlled by computer algorithms, many of which scan Twitter feeds, news headlines and other social media looking for tidbits that can move markets. And much of that trading it taking place in a blink of an eye with high-speed traders who measure time in microseconds. In a recent research report, JPMorgan Chase estimated that just 10 percent of daily trading is done by human stock pickers. The growing reliance on technology rather than humans to make stock trades has made identifying disreputable news a bigger challenge, market industry veterans have said.