It was clearly false, but the fear of another terrorist attack rattled Wall Street and the Dow Jones Industrial Average dropped 143 points during a three-minute plunge.
White House spokesperson Jay Carney quickly responded to assure the public the president had not been injured.
"The president is fine, I was just with him," he said.
The president was in fact at an awards ceremony at the White House.
It appeared to be a phishing attack. Stanford University professor and futurist Paul Saffo says it was an unsophisticated breach.
"AP has the same problem you and I have, that someone got a hold of their password on their Twitter account so I wouldn't question their news feed," he said. "This is a problem inside Twitter."
The AP suspended its Twitter accounts following the hack and says it is working to correct the issue, but the hack underscores the growing concern of breaches on social media sites like Twitter, which recently has seen attack on accounts belonging to NPR, the BBC and CBS' 60 Minutes. It comes at a time when cyber-security has become a top national security concern and is again turning the spotlight on Twitter's security protocols.
Wired Magazine senior reporter Kim Zetter says Twitter is working on a better security program.
"You need two pieces of authentication to get into an account, you need your password and you need something else," she said.
The dramatic impact on the stock market also focused once again on the potential pitfalls of computerized trading.
"Computers don't have emotions, computers don't have intuition, computers trade off one variable and one variable only," Saffo said.
A Twitter spokesperson told ABC7 News they do not comment on individual accounts for privacy and security reasons.