U.S. stocks dropped sharply on Monday as the biggest and most popular technology stocks plunged. Facebook and Apple led the losses. The Dow Jones Industrial Average fell 395.78 points to 25,017.44.
The S&P 500 dropped 1.7 percent to 2,690.73 as the technology sector pulled back 3.8 percent. The tech-heavy Nasdaq Composite lagged, falling 3 percent to close at 7,028.48 as Amazon dropped 5.1 percent.
The popular “FAANG” trade made up of Facebook, Amazon, Apple, Netflix and Alphabet is now in a bear market with each member down more than 20 percent from their one-year highs.
“It’s going to require a recovery in tech to make things happen,” said Greg Luken, CEO of Luken Investment Analytics. “I think where we are in tech, we’re going to see tough sledding towards the end of the year. I think stocks that are down will see further selling pressure.”
Apple led tech shares lower after The Wall Street Journal reported the company has cut production orders for the new iPhones unveiled earlier this year.
The company’s stock fell nearly 4 percent and fell back into a bear market, down 20 percent from its 52-week high.
Facebook shares dropped 5.7 percent as the company was hit with more negative publicity regarding the fallout from its handling of the 2016 election and foreign influence on its platform. A WSJ report said Facebook CEO Mark Zuckerberg blamed COO Sheryl Sandberg for how the company handled the situation.
This report comes after backlash from a New York Times article detailing how Facebook company ignored and then tried to hide that Russia used the platform to disrupt the U.S. election in 2016.
Tech shares also fell after The Financial Times reported Chinese authorities have alleged “massive evidence” of antitrust violations by Samsung, SK Hynix and Micron Technology. The report also said China would deepen its investigation into the three companies, which are the largest memory-chip manufacturers in the world.
Micron shares fell 6.6 percent while Advanced Micro Devices dropped 7.5 percent. Shares of Netflix and Alphabet also dropped 5.5 percent 3.8 percent, respectively.
The technology sector was the best performer in the S&P 500 last year. However, tech is down more than 10 percent from its 52-week high, which was reached earlier this year.
“For the past year and a half, we’ve had a rolling correction that has been hitting sector after sector. I think investors are finally getting around to the leaders,” said Maris Ogg, president at Tower Bridge Advisors.
Ogg added she thinks this decline in tech is a buying opportunity. “Many of these companies have best growth rates of any industry. We think that’s going to continue.”
Stocks also declined on Monday after Vice President Mike Pence said in a speech Sunday that there would be no end to U.S. tariffs on $250 billion worth of Chinese goods unless Beijing changed its ways. His comments came at an APEC meeting in Papua New Guinea.
Pence’s comments also follow President Donald Trump saying last week he may not impose further tariffs on Chinese goods.
China and the U.S. have been in a trade spat for most of the year. The world’s largest economies have slapped tariffs on billions of dollars worth of each other’s goods. This has raised concern among global investors that the world economy could slow down amid tighter trading conditions.
Shawn Cruz, manager of trader strategy at TD Ameritrade, said the main catalyst for the market recently has been worry about U.S.-China trade. “That’s really the big driver and that’s what you’re seeing in tech. These companies have been at the forefront of those U.S.-China discussions.”