Facebook plunge leads tech, Wall Street sell-off
(Reuters) - U.S. stocks dropped on Monday as a plunge in shares of Facebook led a sell-off in technology stocks on reports that the social media company’s user information was misused.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., March 19, 2018. REUTERS/Lucas Jackson
Facebook shares tumbled 7.1 percent as Chief Executive Mark Zuckerberg faced calls from both U.S. and European lawmakers to explain how a consultancy that worked on President Donald Trump’s election campaign gained access to data on 50 million Facebook users.
The stock was set for its worst day since September 2012 and was down about 13 percent from its record high hit on Feb. 1, to put the stock squarely in correction territory, a drop of 10 percent from its high.
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Facebook’s plunge weighed heavily on the S&P technology sector, down 2.79 percent, as well as the Nasdaq, off more than 2 percent. Both indexes were on track for their worst daily performance since Feb. 8.
Other major companies with large tech businesses also dropped as recent concerns over regulation in the arena increased. Apple lost 2.24 percent while Alphabet fell 3.8 percent and Microsoft declined 2.5 percent.
“Everyone knows that tech fundamentals are solid, but rumblings like what you are seeing today, that does sort of prompt people to think is this as good as it is going to get or should I take some profits here,” said Eric Freedman, chief investment officer for U.S. Bank Wealth Management in Minneapolis.
The Dow Jones Industrial Average fell 454.01 points, or 1.82 percent, to 24,492.5, the S&P 500 lost 53.57 points, or 1.95 percent, to 2,698.44 and the Nasdaq Composite dropped 187.23 points, or 2.5 percent, to 7,294.76.
Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., March 19, 2018. REUTERS/Lucas Jackson
The S&P once again fell below its 50-day moving average, seen as a technical support level, for the first time since early March. The Nasdaq came about 2 points from its 50-day before paring losses.
Investors were also cautious ahead of the two-day policy meeting by the U.S. Federal Reserve on Tuesday.
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The market believes the Fed is set to raise interest rates on Wednesday as Thomson Reuters data shows traders expect a quarter-point hike to be a certainty. Investors are now grappling with the question of whether an improving economy could lead to more hikes than anticipated.
“Some of the more salient questions investors have is has the tone of the Fed, which this time last year was certainly more skewed towards being dovish, has it now extended to becoming more hawkish?” said Freedman.
Industrials fell 1.45 percent against the backdrop of worries about a global trade war, which are set to dominate a two-day G20 meeting starting later in Argentina.
Selling was broad, with each of the 11 major S&P sectors in the red. The CBOE Volatility index was up 5.48 points at 21.28, in one of its sharpest gains since the market sell-off in February.
Declining issues outnumbered advancing ones on the NYSE by a 5.73-to-1 ratio; on Nasdaq, a 3.73-to-1 ratio favored decliners.