Technology Stocks Tumble Again in Sudden Afternoon Selloff

(Bloomberg) -- Blame it on tech stocks -- again.

Thanks to fresh blows to companies from Nvidia Corp. to Facebook Inc., the biggest industry in the S&P 500 Index dropped 3.5 percent, the biggest decline since the broad market selloff reached its worst point on Feb. 8. The Nasdaq 100 Index sank for a ninth decline in 11 days. Facebook gave up gains to slump 4.9 percent, with Mark Zuckerberg expected to appear before a House committee in the latest development in the company’s escalating privacy scandal.

While the loss pales in comparison to last week’s worst tumble since 2015, the renewed weakness underscores the vulnerability in an industry whose growth prospects have lured investors, spurring stock gains that have doubled the market in the past three years. That leadership has repeatedly been threatened in the past year as the government stepped up regulations and strategists warned over the risk of momentum unwinding.

“Growth was the thing to buy,” said Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas. “Now the markets are starting to see some chips in the armor. The market is questioning the steadiness of the technology sector, although we still think it’s going to be just fine.”

Most pronounced was the selloff in the FANG block of tech shares and its megacap brethren. The NYSE FANG+ index plunged 5.6 percent, its biggest drop on record.

Facebook, under growing criticism that the social media company has failed to protect user privacy, extended its worst quarterly decline since 2012 as Chief Executive Officer Mark Zuckerberg is expected to testify before the U.S. House Energy and Commerce Committee. The stock tumbled 4.9 percent, closing at the lowest level since July.

Nvidia, the graphics-chip maker that has been seeking to expand in the automotive market, fell 7.8 percent after temporarily suspending its self-driving vehicle testing.

In other tech moves:

• Twitter tumbled 12 percent after Citron disclosed a short bet on the stock and said the company is the most vulnerable to “privacy regulation” among social media peers.
• Netflix, the second-best performing stock in the S&P 500 this year, fell 6.1 percent in a rare pullback. The stock is still up 57 percent for the year.
• Apple Inc. held up the best among tech megacaps, although it still fell 2.6 percent, after releasing a new iPad focused on schools and a new education service called Schoolwork at an event in Chicago.

--With assistance from Elena Popina and Jeran Wittenstein

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net, Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Richard Richtmyer

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