Nation & World

Wall Street sinks as Facebook-led tech selloff deepens

The New York Stock Exchange, on Wall Street at Nassau Street, in Manhattan, New York, on November 4, 2014. (Carolyn Cole/Los Angeles Times/TNS)
The New York Stock Exchange, on Wall Street at Nassau Street, in Manhattan, New York, on November 4, 2014. (Carolyn Cole/Los Angeles Times/TNS)

U.S. stocks sank about 2 percent on Monday, with the Dow Jones Industrial Average shedding nearly 400 points, as Facebook led a selloff in technology stocks on reports that the social media company’s user information was misused.

Facebook shares tumbled 7.1 percent on reports that a political consultancy that worked on President Donald Trump’s campaign gained inappropriate access to data on more than 50 million users, sparking broader concerns about data privacy and security.

The stock was set for its worst day since September 2012 and was down about 13 percent from its all-time high hit on Feb. 1, entering what is called correction territory.

The Nasdaq Composite slid 2.09 percent to 7,325.58 points and the S&P technology index dropped 2.5 percent, both set for their worst one-day percentage fall since a sell-off in early February.

Republican Senator Marco Rubio said he believed some internet companies have grown too fast to digest their responsibilities and obligations.

Amazon, Apple, Netflix and Alphabet – members of the so-called FAANG group of stocks, along with Facebook – were down between 1.7 percent and 7.2 percent.

“Tech companies all use data one way or the other as part of their businesses. They are going to get a lot more scrutiny over what data they are collecting and how they are using it,” said Shawn Cruz, senior trading specialist at TD Ameritrade in Chicago.

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At 12:29 p.m. ET, the S&P 500 was down 1.44 percent to 2,712.36, having spent the session below its 50-day moving average.

The Dow Jones Industrial Average was off 1.23 percent at 24,639.94 and fell below its 100-day moving average.

Industrials fell 0.89 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.

The world’s financial leaders were seeking to clearly endorse free trade and renounce protectionism amid concern that U.S. tariffs on steel and aluminum and looming actions against China could trigger a trade war that would hurt global growth.

All the 11 major S&P sectors were lower. The CBOE Volatility index was up 5.86 points at 21.66, in one of its sharpest gains since the market sell-off in February.

“Increased political uncertainty is driving as well and you’ve a Federal Reserve meeting, so the market’s defensive,” said John Brady, senior vice president at futures brokerage R.J. O’Brien & Associates in Chicago.

“It’s a general pullback in risk and technology tends to have a higher impact on the market.”

The Fed is near certain to raise interest rates on Wednesday, the end of its two-day policy meeting. But the focus is on whether policymakers think economic conditions are strong enough for four hikes this year, one more than the markets expect.

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Declining issues outnumbered advancers on the NYSE for a 4.93-to-1 ratio, and for a 3.53-to-1 ratio on the Nasdaq.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza)

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