The stock market may have had some crazy swings in the past, but this is getting ridiculous.
Yesterday, in the thick of tariff-induced market trading mania, US equities gained and lost trillions thanks to a single post on X by Walter Bloomberg (no relation to the former NYC mayor). The post, which said Trump would pause tariffs, spurred an 8.5% rally for the S&P 500 in just 35 minutes. But when the headline was subsequently confirmed to be false by the White House, markets dropped sharply.
All in all, nearly $4 trillion was briefly added to the S&P 500 on a fake piece of news. In fact, yesterday saw the highest trading volume in the last 18 years, with about 29 billion shares exchanged on US markets throughout the day.
Under the hood
So how does something like this happen? Bots and big bucks.
Automated headlines have been gaining steam on Wall Street, where every second counts and an AI agent can produce articles far faster than an underpaid intern. It’s possible that news aggregator bots saw a combination of words like “Bloomberg, Trump, tariffs, and pause,” probably retweeted by trusted blue-badged users on X, and amplified the information across the world wide web.
That’s when more bots, powered by trading algorithms designed to capitalize on minute-by-minute swings in momentum, saw a shift in markets happening in real time. Those automated trading systems did what they do best and poured money into stocks to try to beat everyone else to the punch, inadvertently exacerbating the totally fake rally.
Making sense of market moves
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It didn’t help that market makers, or the middlemen who provide the liquidity needed to connect buyers and sellers, were overwhelmed by the sudden surge in buying. When the market rises or falls by huge percentage points in mere moments, the market becomes less liquid, which means large, individual trades can move markets even further. And so the dominos kept falling until someone finally decided to ask the White House if one unverified internet rumor was true.
Tariff whiplash
Everyone is grappling with the fact that an entirely new economic policy could be announced via an all-caps Truth Social post, obliterating carefully crafted investment plans in a moment.
Meanwhile, Elon Musk and Trump trade advisor Peter Navarro are catfighting on X, as Wall Street increasingly begs for some kind of deal to avert the steep tariffs laid out on Liberation Day.
The bottom line: Today is unlikely to see the end of market volatility. But some pros think we could be near the bottom.
“There are a number of indicators that suggest that the market is setting up for a rebound,” wrote Head of US Equities at UBS David Lefkowitz today. “Sentiment is poor, positioning is getting depressed, volatility is elevated, and the S&P 500 is already down 12% from its high. All of these indicators suggest to us that a rally is a growing possibility.”—LB
