Meta, the parent company of Facebook, had its stock drop 20% in premarket trading in the United States on Thursday after the social media giant gave a bleak prediction, blaming Apple's privacy restrictions and greater competition.

The surprise loss, which came ahead of Amazon's earnings later in the day, spilled over to Europe, where technology-led sectoral decliners with a 2% decrease, souring the tone across global financial markets on yet another busy day of central bank meetings.

Investors predict policy tightening at the US Federal Reserve will erode the industry's lofty valuations after years of ultra-low interest rates, putting pressure on big US tech in 2022. In January, Nasdaq lost more than 8%, its biggest monthly decrease since the end of 2019.

"The drop in Meta's and other companies' earnings expectations caught markets off guard," said Kenneth Broux, a strategist at Societe Generale in London.

"The tech selloff spilled over into broader equities markets this morning, and with the Fed on the verge of raising interest rates, we could see even more volatility in the future."What Happened to Meta (FB: Facebook) Stocks in December 2021? - Bloomberg

As a result of the limited direct read-across from Facebook, European technology heavyweights ASML, Infineon, and SAP were among the companies weighing the most on the region's STOXX 600 equity benchmark, tumbling more than 1.5 percent. A conservative mentality harmed Infineon as well.

For the first time, Meta recorded a drop in daily active users from the previous quarter, as a battle for consumers with rivals like TikTok, a video-sharing network controlled by China's ByteDance, heats up.

The disappointment over Meta brought up memories of the tech bubble crash in 2000, highlighting how investors have become pickier after the sector's record-breaking run.

According to research firm Vanda, retail investors focused their purchases in late 2020 and early 2021 on costly tech, electric vehicles, and so-called "meme" stocks. Large-cap tech stock purchases have soared in recent weeks, but speculative assets have seen minimal demand.

In the first weeks of 2022, the so-called FAANG group of Facebook, Amazon, Apple, Netflix, and Google's Alphabet has lost about $400 billion in market capitalization as cheaper portions of the markets become more appealing as central banks reduce stimulus.

Other social media stocks, such as Twitter, Pinterest, and Spotify, which have been troubled by a fight over COVID vaccine misinformation, were also hammered hard in premarket trade on Thursday.

On Thursday, stock futures for the Nasdaq, which is dominated by technology, plunged as high as 2.4 percent. (The market cap loss in paragraph 10 and the chart has been corrected to $400 billion from $4 trillion.)