Facebook's data leak to Trump campaign sends Wall Street tumbling
Stocks on Wall Street have tumbled as shares of Facebook and other technology stocks pulled major indexes lower.
In the final hour of trading, the Dow Jones Industrial Average is down 425 points, or 1.7%, to 24, 527. The S&P 500 has dropped 1.8% to 2703, while the tech-heavy Nasdaq Composite has slumped 2.3% to 7314.
Facebook shares plummeted 6.6% after it said data firm Cambridge Analytica with ties to the 2016 Trump campaign improperly kept data on tens of millions of users.
Facebook’s fall is its biggest percentage decrease in more than two years.
While all 11 major S&P 500 sectors were in the red, tech stocks were among the hardest hit, with those shares down 1.6% in recent trading.
Questions over how Facebook and other companies manage third-party access to its users’ information come at a vulnerable time for the tech sector.
Taxing tech giants
In Brussels this week, the European Union will unveil legislative proposals to increase taxes on tech giants, as part of an escalation in trade tensions between the US and other countries.
“This potential backlash is all part of this building trade war that’s beginning to emerge,” says Michael O’Rourke, chief market strategist at Jones Trading. “It’s something people should be concerned about.”
Other technology companies that are struggling include Google parent Alphabet, which is down 2.7%, and PayPal Holdings, which is off 1.9%. Most chipmakers are trading lower, too. Nvidia has declined 1.9%, while Broadcom has dropped 2.1%.
Investors are also awaiting further clarity this week on whether the US Federal Reserve will need to raise interest rates more aggressively to keep the economy from overheating.
Futures contracts gave a 94% chance to the Fed raising interest rates by 0.25 percentage point on Wednesday to a range between 1.5% and 1.75%. This would be the first time borrowing costs go up in 2018 and investors are trying to gauge whether Fed chairman Jerome Powell will raise rates three more times this year or only two.
Chances of rates going up more than three times this year are now at 34%, futures markets suggest, compared with 24% a month ago.
Oil prices edged down after Friday's late surge of 1.5%. US light, sweet crude for April delivery is at $US62.13 a barrel. Brent, the global benchmark is $US66.10 a barrel.
The Stoxx Europe 600 fell 1.1%. France’s CAC 40 also lost 1.1%, Germany’s DAX shed 1.4% and the UK FTSE 100 dropped 1.7%.
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