The social media company said on Tuesday it faced questions from the U.S. Federal Trade Commission about how its users' personal data was mined by a political consultancy hired by President Donald Trump's campaign.
Shares of Twitter plunged, down 10.3 percent as of 2.22pm in NY, amid concern about increased scrutiny of social media companies and a Bloomberg report that Israel's government is considering taking "legal action" against Twitter for ignoring repeated requests to remove online content that was inciting or supportive of terrorism. On the downside, Facebook Inc.
Wall Street shares posted increases on Tuesday after the start of the two-day Federal Reserve meeting, and most market participants are expecting an increase in interest rates.
The U.S. central bank as expected raised its policy rate to 1.50-1.75 percent, but disappointed currency traders who had bet it was prepared to raise rates four times this year as the jobs market approaches full employment. The Dow Jones industrial average fell 335 points, with Caterpillar as the worst-performing stock in the index.
A pan-European equity index was off 0.2 percent after the WSJ report on China.
The broader index S&P 500 added 0.15% to its value to 2,716.99 points, driven by the energy sector. "But if we see retaliation, and significant trade disruptions, it's a different order of magnitude (which) could begin to affect global growth forecasts", said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.
"There is a secular issue with Facebook - time spent and user growth".More news: The Weinstein Company has filed for bankruptcy
The tech selloff was a serious setback to markets just as they recovered from an early-February selloff, Milligan said, noting tech had been "the leading light of US and Asian equity markets for over a year". Emerging market stocks lost 0.10 percent.
Traders now expect two more rate hikes later this year, although they said policymakers could set a hawkish tone by forecasting four increases in their "dot plot" projections.
Aside from the Fed, the Trump administration is creating a stir with plans for up to $60 billion in new tariffs on Chinese imports by Friday, targeting technology, telecommunications and intellectual property, sources familiar with the matter told Reuters.
This week's meeting of finance ministers and central bankers of the world's 20 biggest economies failed to defuse tensions, with the G20 saying only that it recognized the need for more "dialogue and actions".
The yield on 10-year U.S. government bonds reached 2.885% and short-term 2-year yield rose to 2.341%.
US stocks ended slightly lower, with major indexes giving up gains in choppy trade in the wake of the Fed statement, while a rise in oil prices helped energy stocks.