How an AI-created photo caused panic in S&P markets

By: Editor

When seeing is not enough to believe….

Late on May 23, 2023 in the predawn hours (EDT), a fake photo of an explosion near the Pentagon spread widely on social media, causing temporary drops in the stock market and perhaps representing the first time artificial intelligence influenced market movement.

The photo of the fake explosion first appeared on Facebook, then spread on Twitter including the Russian state-controlled RT network and news site ZeroHedge (verified account).

Experts quickly identified the photo as a fake, possibly generated by AI, and markets quickly stabilized. The Pentagon and the Arlington Police Department, dismissed information about the explosion. But the incident illustrates one of the main concerns about the need to regulate AI: that the technology can be used to create panic and spread misinformation, with potentially disastrous consequences.

OpenAI CEO Sam Altman and two key contributors have warned that these systems could reach “super-intelligence” within a decade. Governments around the world should consider creating a regulator, similar to the International Atomic Energy Agency, that can, if necessary, restrict systems that exceed a certain level of capability.

It is worth noting, however, that artificial intelligence is not always negative for markets. Investors are raising the market capitalization of companies associated with the technology, including Alphabet, Meta, Microsoft and chipmaker Nvidia. As Morgan Stanley Wealth Management points out, seven companies responsible for 85% of the gains in the S&P 500 this year, six of which are strongly related to A.I.

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