Dow plunges as tech stocks are crushed by news of Facebook breach
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Stocks fell around the world as technology shares dropped, led lower by a report of a data breach that sent Facebook sliding the most it has in 2 1/2 years.
The Guardian and The New York Times reported on Saturday that Cambridge Analytica had accessed data from 50 million Facebook users during the 2016 US presidential campaign without their permission.
It used that information for highly targeted political ads on Facebook.
Facebook’s loss of as much as 8.1% spurred a decline of 1.8% in the tech-heavy Nasdaq 100 index, while the benchmark S&P 500 slid 1.4% and the Dow Jones industrial average decreased 1.3%, or 336 points at the close.
It’s a situation that highlights an unfortunate reality about mega-cap technology firms like Facebook: While their outsize weighting in major indexes is a boon when their shares are rising, the comeuppance can be swift and unforgiving during times of weakness.
And it leaves only one group poised to benefit: short sellers.
Elsewhere in tech news, Business Insider Australia reports that Wall Street’s coming around to a worrying consensus about Apple.
“The iPhone X didn’t sell well during the holiday season”: Apple suppliers talk about the company’s struggling sales
It’s also likely that investors are positioning ahead of the two-day Federal Reserve meeting that starts on Tuesday.
Jerome Powell, the new US Fed chairman, will make his first decision on interest rates, and some market participants are fearful that hawkish actions will drive more equity selling.
After all, the additional yield afforded by a rate hike theoretically makes bonds more attractive relative to their stock counterparts.
Selling pressure in equities was also felt in overseas markets, as the Nikkei 225 lost 0.9% and the Stoxx Europe 600 declined 1.1%.