Hundreds of billions of dollars in value were wiped from some of the market leading tech and associated stocks on Wall Street on Monday, led by Facebook which suffered its biggest one day fall in five and a half years.
Claims Facebook allowed its users data for be misused for political reasons in the 2016 US elections triggered a sell off across Wall Street on Monday, especially in leading tech stocks.
The fall saw US stocks close more than 1% lower on Monday, led by that weakness in Facebook.
Facebook shares slumped 6.8%, losing nearly $US38 billion and dropping its market value to just over $US501 billion.
It was Facebook’s biggest one-day fall since September 2012 – after investors sold off the stock following reports that the social media network allowed data from millions of users to be harvested and used without their consent.
Alphabet and Apple, two other companies that have been targeted by privacy advocates in the past, fell 2.2% and 1.5%. Amazon shares lost 1.6% amid fears that the backlash against Facebook could spread to other big tech names.
Overall, more than $US100 billion were wiped out off the values of the so-called FAAMNG stocks -Facebook, Apple, Amazon, Microsoft, Netflix and Google (Alphabet) on Monday.
As a result, the Dow fell 336 points, or 1.4%, to 24,611, dragging the blue-chip average into negative territory for 2018. The S&P 500 shed 39 points, or 1.4%, to 2,712 and the Nasdaq Composite lost 138 points to 7,344, a fall of 1.8%.
Our market rose 10 points after being much higher earlier in Monday’s session.
The Nasdaq saw outsize weakness due to technology shares; the sector fell 2.1% in its biggest drop since February 8.
Gold rose, oil dipped and our market will start with a 33 point fall on the overnight ASX 200 futures market. That was at 7am. An hour earlier the fall was more than 50 points as Wall Street was staring at 400 point losses on the Dow.
Worries about Facebook led the sector lower after, facing heavy selling pressure over how it manages third-party access to its users’ information, after saying a firm with ties to the 2016 Trump campaign improperly kept member data for years despite saying it had destroyed those records.
Regulators in the US and UK have criticised Facebook for allowing Cambridge Analytica, a data firm that helped the Trump campaign, to access data on users without their express permission and retain that data despite saying that it had destroyed those records.
EU lawmakers joined their UK and US counterparts in saying they would investigate reports that Cambridge Analytica mined the personal data of 50 million users to create profiles to target them in elections.
Reports in The New York Times and The Observer say the company broke Facebook’s rules by using data collected solely for research. Britain’s Channel 4 is reported to have a special news report on the subject and that Cambridge is trying to block its broadcast.
The 6.8% fall was its biggest one-day drop since March 2014. The day’s losses were widespread, with all 11 of the primary S&P 500 sectors ending down on the day and 29 of the 30 Dow stocks ending in the red.
Investors are fearful that regulators will start to clamp down on Big Tech companies and their services following the revelations about how data at Facebook may have been manipulated.
The UK’s data protection authority and the Massachusetts attorney-general have already opened probes into the issue while the UK’s Electoral Commission is also examining it.
