Following a technology stock sell-off led by Facebook, the Dow Jones Industrial Average plummeted in afternoon trading on Monday (March 19), at one point declining over 400 points.
According to news from Reuters, Wall Street analysts blamed Facebook and the revelation that Cambridge Analytica, the political consulting firm that worked on President Donald Trump’s 2016 campaign, accessed the data of 50 million people and used it to target them during the run-up to the election. The drop in the social network’s stock, which is on its way to having its worst day since Sept. 2012, comes after it hit an all-time high at the start of February — but then sank with all the other stocks in the short-lived correction last month. All of the FAANG stocks, which include Facebook, Amazon, Apple, Netflix and Alphabet (Google) were down in trading.
“Tech companies all use data one way or [another] 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, a senior trading specialist at TD Ameritrade told Reuters in another report.
In addition to technology stocks, Reuters noted industrial equities have been declining over concerns about a global trade war, thanks to President Trump’s new tariffs on imported steel and aluminium. Those tariffs are expected to be the main topic of the two-day G20 meeting that’s beginning today (March 19). The S&P was also under pressure in trading, with volatility up in one of its sharpest gains since the February correction. The Federal Reserve starts its two-day meeting Tuesday, in which the markets largely expect it to raise interest rates.
Late last week in a blog post, Facebook revealed the incident hours ahead of media reports that Cambridge Analytica gained access to data and did not delete the information. The revelation, which is yet another hit to the social media giant’s reputation, drew backlash from politicians and consumer advocacy groups. Previously, Facebook faced widespread criticism that it did nothing to prevent fake news and offensive advertisements, from permeating its social media platform during the run-up to the 2016 U.S. presidential election.
“It’s clear these platforms can’t police themselves,” Democratic U.S. Senator Amy Klobuchar tweeted after Facebook’s latest revelation, according to Reuters. “They say, ‘Trust us.’ Mark Zuckerberg needs to testify before Senate Judiciary.”