Facebook's valuation has plummeted by billions in the face of bleak prospects.

The larger US tech industry was shocked by a grim projection from owner Meta Platforms, which threatened to upend a fledgling rebound in stock markets. Facebook has lost over 25% of its market value.

Meta's stock dropped 24.5 percent on Friday, putting it on track for its worst single-day drop ever — the Nasdaq was down more than 2.0 percent – as the firm cited Apple's privacy rules and greater competition from rivals like TikTok for its poor performance.

The stock drop would wipe away more than $US200 billion ($A281 billion) off Meta's market cap, slashing Nasdaq's market value by 0.9 percent and the S& P 500 by 0.5 percent.

The Nasdaq, which is heavily weighted in technology, dropped 2.2 percent as shares of other social media companies plummeted as well.

Twitter Inc and Pinterest Inc both dropped more than 6%, while Snapchat sank 18.8%.

Alphabet Inc and Microsoft Corp both dropped approximately 0.5 percent and 1.0 percent, respectively. Amazon.com Inc, which was set to release earnings later in the day, fell 6.3 percent.

"This is unsettling investors' resolve around the recent relief rally in tech," said Robert Pavlik, chief investment strategist at New York-based SlateStone Wealth LLC.

"There's also a larger issue at hand, which is increased interest rates and inflation." This is sort of shaking out the weak hands that have been attempting to ride the tech bounce."

In early trade, all 11 main S& P 500 sectors fell, with communication services leading the way with a 5.2 percent dip.

The Dow Jones Industrial Average fell 278.64 points, or 0.78 percent, to 35,350.69, the S& P 500 fell 63.68 points, or 1.39 percent, to 4,525.70, and the Nasdaq Composite fell 317.90 points, or 2.20 percent, to 14,099.65 in early trade.

After hitting a near three-week low in the previous session, the CBOE volatility index, Wall Street's fear measure, nudged up 1.57 points to 23.66.

A second rate hike by the Bank of England, as well as a statement by European Central Bank President Christine Lagarde that any decision to raise rates would be "data-dependent," deviating from her long-held position that the ECB was "very unlikely" to raise rates this year, added to the market's woes.

According to Refinitiv statistics, about half of the S& P 500 businesses have reported results so far this earnings season, and 77.1 percent of them have outperformed analysts' profit projections, compared to an average of 84 percent during the previous four quarters.

Last week, the number of persons submitting new jobless claims in the United States declined more than predicted as COVID-19 infections reduced, indicating that the forecast slowdown in job creation in January was likely only temporary.

In January, a measure of US services industry activity fell to an 11-month low as a return of COVID-19 infections hampered demand at high-contact industries and kept employees at home.

On the NYSE, decliners outweighed advancers by a 6.03-to-1 ratio, while on the Nasdaq, decliners outnumbered advancers by a 4.05-to-1 ratio.

The S& P 500 index hit 17 new 52-week highs and six new lows, while the Nasdaq hit 11 new 52-week highs and 69 new lows.