While you were sleeping: Facebook sparks tech selloff
By Margreet Dietz
March 20 (BusinessDesk) - Wall Street dropped as a plunge in Facebook shares led a decline in technology stock amid concern the industry could face an increase in regulation.
Shares of Facebook sank, down 6.5 percent as of 1.41pm in New York, amid reports of misuse of its users’ data.
“Tech companies all use data one way or the other as part of their businesses,” Shawn Cruz, senior trading specialist at TD Ameritrade in Chicago, told Reuters. “They are going to get a lot more scrutiny over what data they are collecting and how they are using it.”
In 1.45pm trading in New York, the Dow Jones Industrial Average dropped 1.6 percent, while the Nasdaq Composite Index gave up 2.3 percent. In 1.30pm trading, the Standard & Poor’s 500 Index retreated 1.9 percent.
Also weighing on sentiment were concerns about an accelerating pace of US interest rate increases, as well as the ongoing chaos in the Trump administration and its moves towards increased protectionism.
“If the Facebook news didn’t exist there would be all sorts of jitters here just given the Trump stuff,” Michael Purves, Weeden & Co’s chief global strategist, told Bloomberg. “If the regulatory clouds come on Facebook, certainly Google and Amazon will face increasing questions about their ability to generate outsized earnings growth if the regulators are going to be beating them.”
On Tuesday, the Federal Open Market Committee begins its first two-day policy meeting under Chair Jerome Powell. While US policy makers are widely expected to announce an interest rate increase on Wednesday, investors will look for any indications that they are looking to speed up their planned pace of hikes.
The Dow dropped, led by declines in shares of Caterpillar and those of DowDuPoint, down 3.3 percent and 2.8 percent respectively. All 30 stocks in the Dow traded weaker as of early afternoon.
US Treasuries rose, sending the yield on the 10-year note one basis point lower to 2.84 percent.
Shares of Apple fell 2.1 percent as of 1.37pm in New York. The company is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes, according to people familiar with the situation, Bloomberg reported.
The technology giant is making a significant investment in the development of next-generation MicroLED screens, say the people, who requested anonymity to discuss internal planning, according to Bloomberg.
In Europe, the Stoxx 600 Index declined 0.7 percent from the previous close. The UK’s FTSE 100 index shed 1.7 percent, Germany’s DAX Index fell 1.4 percent, while France’s CAC40 Index slid 1.1 percent.
The British pound climbed after the UK and the European Union reached agreement on the terms for the transition period immediately after Brexit.