But there is much more money to be made in reacting to the news at millisecond speed, and therefore without any critical analysis whatsoever. Many of the orders that caused the drops were probably placed by machines. Real-time semantic analysis-triggered trading seems to be what the kids are up to these days...

For a fun conspiracy theory (or at least, future conspiracy theory), consider that the "hackers" could have been paid by someone to take control of the AP's twitter feed and post something that might cause such a reaction. The temporary dip could make a lot of money for someone who was expecting it.

I'm not saying that's what happened here, but it wouldn't be surprising to hear about some fund or investment firm employing such a tactic in the future. Just imagine what would happen if organized crime got into the HFT game? That is, assuming they're not in it already.

Yes, it's called journalism.

Good luck with that. There is nothing about "White House attacked" that is less plausible than "bomb attack on Boston marathon".