A fabricated image of an explosion near the Pentagon went viral on social media Monday morning, temporarily driving US markets down in what might be the first instance of an AI-generated image affecting the market.

When the photo went viral shortly after 10 am New York time, the S&P 500 fell by around 0.3% to a session low. The index immediately recovered once it was revealed that the image was fake.

The fake photo, which initially emerged on Facebook, depicted a massive column of smoke outside the US military headquarters in Virginia, according to a Facebook user.

It quickly spread on Twitter accounts with millions of followers, including the financial news site ZeroHedge.

According to an email from a Pentagon duty officer to Bloomberg, there were no reported occurrences Monday morning. Arlington Police Department likewise stated, "There is NO explosion or incident taking place at or near the Pentagon reservation, and there is no immediate danger or hazards to the public."

@PFPAOfficial and the ACFD are aware of a social media report circulating online about an explosion near the Pentagon. There is NO explosion or incident taking place at or near the Pentagon reservation, and there is no immediate danger or hazards to the public. pic.twitter.com/uznY0s7deL

— Arlington Fire & EMS (@ArlingtonVaFD) May 22, 2023

Before government sources refuted it and the Twitter accounts that propagated it, people pointed out that the image may have been generated by artificial intelligence.

Nick Waters, a researcher at the open-source intelligence group Bellingcat, stated as quoted by Bloomberg that the “shock” of hearing about a rumored blast near the Pentagon led him to inspect the image.

“Check out the frontage of the building, and the way the fence melds into the crowd barriers,” he said on Twitter. “There’s also no other images, videos or people posting as first hand witnesses.”

Confident that this picture claiming to show an "explosion near the pentagon" is AI generated.

Check out the frontage of the building, and the way the fence melds into the crowd barriers. There's also no other images, videos or people posting as first hand witnesses. pic.twitter.com/t1YKQabuNL

— Nick Waters (@N_Waters89) May 22, 2023

As the truth became known, the Twitter accounts responsible for spreading the image began to remove their posts or make corrections. 

While the image's origins are unknown, the belief that it was made by AI has heightened fears that developing technologies that make it simple to manufacture photos and other material may hasten the spread of disinformation.