Market Recap: Stocks Plunge on Facebook’s Systemic Problems; Vol Crosses 50-Day MA

U.S. stocks nosedived on Monday, as security vulnerabilities at Facebook dragged technology shares lower and political drama surrounding President Trump further weighed on investor sentiment.

Stocks Take the Plunge as Volatility Returns

All of Wall Street’s major indexes plunged, with the Dow Jones Industrial Average shedding as much as 493 points. The blue-chip average closed down 335.60 points, or 1.4%, at 23,610.91 – its lowest in nearly three weeks.

The broader S&P 500 Index declined 1.4% to 2,712.92, with all 11 primary sectors closing in the red. Information technology fell more than 2%. Six other sectors declined by at least 1%.

Plunging tech shares triggered landslide losses for the Nasdaq Composite Index. The tech-heavy benchmark fell 1.8% to 7,344.24.

The CBOE Volatility Index, commonly known as the VIX, returned to its historically average range following a 22% surge. The index closed at 19.27, its highest since Mar. 1.

The volatility gauge had been trending lower since the end of February but continued to hold above the 200-day simple moving average (SMA). On Monday Vol crossed the 50-day moving average, an ominous sign for stock traders.

Political Turmoil

Facebook contributed to the turmoil on Monday with shares sliding more than 6% on reports that it failed to protect consumer data. Several news clips reported that analytics firm Cambrige Analytica collected information on 50 million Facebook users without their consent. The group worked on President Trump’s social media campaign in 2016.

Stocks were also pressured by Trump’s Twitter tirade over the weekend, where he accused special counsel Robert Mueller of tapping “hardened Democrats” to investigate alleged ties with Russia. Trump also fired back on allegations that former FBI Director Andrew McCabe was dismissed over incriminating documents on the president.

“Spent very little time with Andrew McCabe, but he never took notes when he was with me. I don’t believe he made memos except to help his own agenda, probably at a later date. Same with lying James Comey. Can we call them Fake Memos?”, Trump tweeted Sunday.

Cryptocurrencies Rebound

The cryptocurrency market rebounded as much as 15% after a top central banker advised the Group of 20 that digital assets posed no serious threat to financial stability. Bank of England Governor Mark Carney, who also serves as Chairman of the G20’s Financial Stability Board, issued the statement via letter that appeared online over the weekend.

Market capitalization for all cryptocurrencies reached a high of $333.2 billion on Monday after trading as low as $275.4 billion the day before. At the time of writing, the total market was worth $325.6 billion.

Bitcoin added more than $1,200 en route to a session high of $8,687. The world’s first digital currency now accounts for more than 44% of the total market.

All other coins in the top 100 reported gains on Monday, according to data provider CoinMarketCap. The vast majority put up double-digit gains, with the likes of Cardano, EOS and MonaCoin adding 30% or more.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi