NEW YORK – U.S. stocks dropped on Monday (March 19), with the S&P and Nasdaq suffering their worst day in just over five weeks, as concerns over increased regulation for large tech companies was spearheaded by a plunge in Facebook shares.
Facebook shares tumbled 6.8 percent as Chief Executive Mark Zuckerberg faced calls from both U.S. and European lawmakers to explain how a consultancy that worked on President Donald Trump’s election campaign gained access to data on 50 million Facebook users.
The stock had its worst day since March 2014 and was down 10.8 percent from its closing record hit on Feb. 1, to put the stock squarely in correction territory, a drop of 10 percent from its high.
Facebook’s plunge weighed heavily on the S&P technology sector, down 2.11 percent, as well as the Nasdaq, off more than 2 percent. Both indexes had their worst daily performance since Feb. 8.
Other major companies with large tech businesses also dropped as recent concerns over regulation in the arena increased. Apple lost 1.53 percent while Alphabet fell 3 percent and Microsoft declined 1.8 percent.
“What’s chilling to an investor is whether Facebook will be able to get advertisers to pay for the rich data they pay for today,” said Kim Forrest, Senior Portfolio manager, Fort Pitt Capital, Pittsburgh.
“Investors are not only concerned about losing advertising dollars. They’re also concerned these companies might come under relatively heavy regulation.”
The Dow Jones Industrial Average fell 335.6 points, or 1.35 percent, to close at 24,610.91, the S&P 500 lost 39.09 points, or 1.42 percent, to 2,712.92 and the Nasdaq Composite dropped 137.74 points, or 1.84 percent, to 7,344.24.
The S&P once again fell below its 50-day moving average, seen as a technical support level, for the first time since early March. The Nasdaq came about 2 points from its 50-day before paring losses.
Investors were also cautious ahead of a two-day monetary policy meeting at the U.S. Federal Reserve starting on Tuesday.
The market believes the Fed is set to raise interest rates on Wednesday as Thomson Reuters data shows traders expect a quarter-percentage-point hike to be a certainty. Investors are now grappling with the question of whether an improving economy could lead to more hikes than anticipated.
“Some of the more salient questions investors have is, has the tone of the Fed, which this time last year was certainly more skewed towards being dovish, has it now extended to becoming more hawkish?” said Eric Freedman, chief investment officer for U.S. Bank Wealth Management in Minneapolis.
Industrials fell 0.82 percent against the backdrop of worries about a global trade war, which are set to dominate a two-day G20 meeting in Argentina.