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Wall Street slides as Facebook data issue pounds tech sector

Stock MarketsMar 19, 2018 12:40PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York

By Sruthi Shankar

(Reuters) - U.S. stocks slid about 1 percent on Monday, with volatility spiking, as Facebook's shares sank after reports that its user data was misused led to concerns over broader privacy violations and sparked a selloff in technology stocks.

Facebook (NASDAQ:FB) shares 6 percent and were on track for their worst day in more than three years 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.

That sparked concerns over the collection and use of data, especially related to individuals, at other tech companies and sent the Nasdaq Composite sliding 1.5 percent and the S&P technology index down 1.8 percent in their worst day 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 (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Alphabet (NASDAQ:GOOGL) – all part of the so-called FAANG group, along with Facebook – were down between 1 percent and 6.3 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.

"That's dragging a lot of those FAANG stocks down because at the end of the day, really what a lot of those companies did is they were taking a lot of data and using algorithms to dial in their product," Cruz said.

At 11:00 a.m. ET, the Nasdaq declined 1.58 percent to 7,363.71 and the S&P 500 fell 1.05 percent to 2,723.09.

The Dow Jones Industrial Average was down 1.01 percent at 24,694.52, weighed down by industrial stocks.

Industrials fell 0.83 percent ahead of the Group of 20 finance ministers' meeting, where Trump's tariffs plans are likely to dominate discussions.

All the 11 major S&P sectors were lower. The CBOE Volatility index was up about 3 points at 18.68, in one of its sharpest gains since early February.

"You see money flow a lot out of these industries across the board, you've come out of bonds a little bit too and a pop in VIX, that points to a little bit more of risk being priced in," said Cruz.

The Federal Reserve's policy meeting, over Tuesday and Wednesday, is also in focus as investors brace for a near-certain interest rate hike this week.

But the focus is on whether policymakers think economic conditions are strong enough for four hikes this year, one more than the markets expect.

Declining issues outnumbered advancers on the NYSE for a 4.39-to-1 ratio, and on a 3.41-to-1 ratio on the Nasdaq.

Wall Street slides as Facebook data issue pounds tech sector
 

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