Dow drops 335 points, Nasdaq slides 1.8% as Facebook drags tech shares lower

• Facebook was the worst-performing stock in the S&P 500, sliding 6.8 percent.
• Shares of the social media giant fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent.
• Investors also cast a wary eye at Washington following a Twitter tirade from Trump over the weekend.

U.S. stocks pulled back on Monday as a decline in Facebook pressured the technology sector. Wall Street also paid attention to Washington after a Twitter meltdown from President Donald Trump.

The Nasdaq composite dropped 1.8 percent to 7,344.24 in its worst day since Feb. 8 as Facebook dropped 6.8 percent. The Dow Jones industrial average fell 335.60 points to close at 24,610.91, with Caterpillar as the worst-performing stock in the index. The S&P 500 declined 1.4 percent to 2,712.92, with tech dropping 2.1 percent. Facebook was the worst-performing stock in the S&P 500 and posted its biggest one-day decline since March 2014.

Facebook fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent. Cambridge Analytica worked on Facebook ads with President Donald Trump's campaign in 2016.

"We think this episode is another indication of systemic problems at Facebook … We see enhanced risks for the company, but no near-term tangible impact on its business," Brian Wieser, an analyst at Pivotal Research, said in a note Monday. It was "made clear in the reporting is that Facebook did not make sufficient efforts to recover users' data, which then informed ad targeting in the 2016 US election. It also did not disclose the leak to users or investors."

Brendan McDermid | Reuters

Traders work on the floor of the New York Stock Exchange.

Shares of Facebook closed more than 10 percent below their all-time high set on Feb. 1 and dropped below their 50-day and 100-day moving averages, two key technical levels. Other technology shares also saw some selling pressure. Google-parent Alphabet and Apple, closing 3 percent and 1.5 percent lower, respectively.

"Part of me worries retail investors are selling out of the ETFs they bought to get FANG exposure," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "That could bring down the entire complex."

The Cboe Volatility index (VIX) — widely considered the best gauge of fear in the market — broke above 20 for the first time since March 7.

Investors also cast a wary eye at Washington following a Twitter tirade from Trump over the weekend.

On Sunday morning, Trump accused special counsel Robert Mueller of hiring "hardened Democrats" to probe alleged ties between his 2016 presidential campaign and Russia. Mueller is a Republican who has held appointments under Democratic and GOP presidents.

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The president also dismissed the idea of former Deputy FBI Director Andrew McCabe – who was fired on Friday just two days before his retirement – having incriminating documents on him. Shortly after his firing, several media reports suggested McCabe kept a file of notes on his discussions with Trump, similar to documents former FBI Director James Comey is said to have taken.

Trump called those documents "fake memos" in a tweet.

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Late Sunday, White House lawyer Ty Cobb once again said the president was not considering or discussing firing special counsel Robert Mueller.

The recent turmoil in Washington has this bull market "limping," according to Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets.

"Washington has turned into more of a headwind than a tailwind recently," Calvasina told CNBC's "Futures Now" recently. She added, however, the major averages could still reach new highs despite all the news out of Washington. "It feels like the bull is limping a little in here, but generally we see more reasons to be positive than negative."

Investors have been paying close attention to Washington recently amid a shift in trade policy and two key departures from the Trump administration. Trump signed two proclamations imposing charges on steel and aluminum imports earlier this month. Gary Cohn, who disagreed with Trump on implementing the tariffs, resigned from his post as director of the National Economic Council. Trump also fired Rex Tillerson from his post as Secretary of State last week, replacing him with CIA Director Mike Pompeo.

The Federal Reserve is expected to raise interest rates on Wednesday with new Fed chief Jerome Powell giving his first press conference. Market expectations for a March rate hike were at 94.4 percent as of Monday morning, according to the CME Group's FedWatch tool.

In corporate news, Rubbermaid-parent company Newell Brands agreed to appoint four independent directors designated by activist investor Carl Icahn. Icahn owns 6.9 percent of Newell's shares.