A sharp loss for Facebook is dragging technology companies lower as U.S. stock indexes skid. The social media company is facing new criticism related to privacy issues following reports that a data mining firm working for the Trump campaign improperly obtained and then kept data on tens of millions of users. The stock is on pace for its biggest loss in four years.
The British pound is rising and European stocks are down after Britain and the European Union said they are getting closer to a deal that will complete Britain’s departure from the EU.
The S&P 500 index sank 46 points, or 1.7 percent, to 2,705 as of 1:45 p.m. Eastern time. The benchmark index is on track for its biggest loss since Feb. 8, when it tumbled almost 4 percent. The Dow Jones industrial average fell 400 points, or 1.6 percent, to 24,552. The Nasdaq composite gave up 169 points, or 2.3 percent, to 7,313. The Russell 2000 index of smaller-company stocks declined 26 points, or 1.7 percent, to 1,559.
Facebook said that the data mining company Cambridge Analytica improperly obtained data on some of its users, and that it had suspended Cambridge while it investigates. Facebook said the company obtained data from 270,000 people who downloaded a purported research app that was described as a personality test.
The New York Times and the Guardian reported that Cambridge was able to tap the profiles of more than 50 million Facebook users without their permission. Facebook first learned of the breach more than two years ago but hadn’t disclosed it. A British legislator said Facebook had misled officials while Senator Amy Klobuchar of Minnesota said Facebook CEO Mark Zuckerberg should testify before the Senate Judiciary Committee.
Facebook sank $12.78, or 6.9 percent, to $172.31. That put the stock on pace for its biggest loss since March 2014.
Other technology companies also struggled. Microsoft slid $2.16, or 2.3 percent, to $92.45 and Apple fell $3.64, or 2 percent, to $174.38. Health care and energy companies also fell, as did consumer-focused companies like retailers.
Daniel Ives, chief strategy officer and head of technology research for GBH Insights, said this is a crisis for Facebook, and it will have to work hard to reassure users, investors and governments.
“This is a defining moment for them,” he said. “It either becomes a blip on the radar and it helps the platform mature… or it becomes the start of something broader.”
Ives said Wall Street is more concerned about the latest situation than it was about issues like Facebook’s platform spreading fake news. That’s because Cambridge reportedly got access to the personal data of a large number of users, and the backlash suggests Facebook may face more regulation or could lose users, advertisers or advertising revenue.
He estimated that $5 billion in annual revenue for Facebook might be at risk and that the company has to work hard to assure users and government agencies. He said the situation could create problems for other tech companies, especially Twitter and Alphabet’s YouTube unit.
Alphabet lost $41.51, or 3.7 percent, to $1,092.91 and Twitter slipped 47 cents, or 1.3 percent, to $35.11.
Representatives of Britain and the European Union said they made progress on the terms of Britain’s departure from the bloc. British envoy David Davis said important steps have been made in the last few days and he thinks EU leaders will back them in a meeting Thursday and Friday. Britain is scheduled to officially leave the EU on March 29, 2019.
The pound rose to $1.4040 from $1.3938. The British FTSE 100 index fell 1.7 percent and Germany’s DAX fell 1.4 percent. France’s CAC-40 was 1.1 percent lower.
Internet technology company CSRA rose 43 cents, or 1 percent, to $41.08 after CACI International offered to buy it for $44 a share in cash and stock, or about $7.2 billion. Defense contractor General Dynamics agreed to buy CSRA in February for $40.75 a share in cash, or about $6.8 billion. General Dynamics said it’s proceeding with that offer, suggesting it doesn’t plan to raise its price.
CACI fell $13.65, or 8.7 percent, to $143.80 and General Dynamics lost 67 cents to $222.07.
KLA-Tencor, which makes equipment used in manufacturing semiconductors, said it will buy Orbotech, a company that makes equipment for electronics manufacturers. The deal values Orbotech at $38.86 a share in cash and stock, or $1.88 billion. Orbotech added $3.54, or 5.9 percent, to $63.44 and KLA-Tencor skidded $7.34, or 6.1 percent, to $113.28.
BONDS: Bond prices turned higher. The yield on the 10-year Treasury note fell to 2.83 percent from 2.85 percent.
ENERGY: Benchmark U.S. crude fell 34 cents to $62 a barrel in New York. Brent crude, used to price international oils, lost 17 cents to $66.04 per barrel in London.
METALS: Gold added $5.50 to $1,317.80 an ounce. Silver rose 5 cents to $16.33 an ounce. Copper lost 2 cents to $3.08 a pound.
ASIA: Tokyo’s Nikkei 225 fell 0.9 percent and Hong Kong’s Hang Seng edged up less than 0.1 percent. Seoul’s Kospi lost 0.8 percent.
CURRENCIES: The dollar fell to 105.84 yen from 106.10 yen. The euro rose to $1.2339 from $1.2284.