Wall St lower in aftermath of global tech outage
US stocks extended their slump as lingering chaos related to a global technical outage caused by a software glitch added uncertainty to an already-anxious market.
The far-reaching tech outage disrupted operations across multiple industries including airlines, banking and healthcare after the glitch in cybersecurity firm Crowdstrike’s software caused Microsoft’s Windows operating system to crash.
While the flaw was identified and fixes deployed, technical issues continue to affect some services.
Crowdstrike shares slid 11.1 per cent, while rival cybersecurity firms Palo Alto Networks and SentinelOne advanced 2.2 per cent and 7.8 per cent, respectively.
All three major US stock indexes ended in negative territory, with the Dow Jones Industrial average suffering the worst of it.
On a weekly basis, both the Nasdaq and the S&P 500 logged their worst week since April, while the Dow, having reached a series of all-time closing highs earlier in the week, posted a Friday-to-Friday gain.
“This tech outage adds some uncertainty and puts pressure on the overall Nasdaq,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“But it won’t have much of an overall impact. Some buying will be delayed. Not only is it a summer Friday but because of the outage (investors) are in wait-and-see mode.
“They’re sitting on the sidelines. That’s what happens to the stock market when volatility rules the day.”
The CBOE Market volatility index, considered a gauge of investor anxiety, touched its highest level since late April.
The smallcap Russell 2000 – a beneficiary of a recent pivot away from megacap growth stocks – ended modestly lower.
Nvidia shares led a sell-off in chips. The Philadelphia SE Semiconductor index underperformed the broader market, falling 3.1 per cent.
Elsewhere, Federal Reserve Bank of New York President John Williams reiterated the central bank’s commitment to bringing inflation down to its two per cent target.
Financial markets have priced in a 93.5 per cent likelihood that the Fed will enter a rate-cutting phase at the conclusion of its September meeting, according to CME’s FedWatch tool.
The Dow Jones Industrial Average fell 377.49 points, or 0.93 per cent, to 40,287.53, the S&P 500 lost 39.59 points, or 0.71 per cent, to 5,505 and the Nasdaq Composite dropped 144.28 points, or 0.81 per cent, to 17,726.94.
Among the 11 major sectors of the S&P 500, energy shares fell the most, while healthcare and utilities were the only gainers.
Second-quarter earnings season ended its first full week, with 70 of the companies in the S&P 500 having reported. Of those, 83 per cent have beaten consensus, according to LSEG.
Analysts now see aggregate year-on-year S&P 500 earnings growth of 11.1 per cent, an improvement over the 10.6 per cent estimate as of July 1.
Next week, a swath of high-profile results is expected from Tesla, Alphabet, IBM, General Motors , Ford and a host of other companies.
“It’s early in earns season, but things have been impressive,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska.
“But the big boys are starting to report next week and what we want to hear is how strong the consumer is and what’s the outlook for future economic growth.”
Eli Lilly advanced one per cent after China approved its weight-loss drug tirzepatide, while Intuitive Surgical jumped 9.4 per cent after a second-quarter results beat.
Travelers tumbled 7.8 per cent on lower-than-expected growth in net written premiums.
Netflix fell 1.5 per cent in choppy trading after the streaming giant cautioned third-quarter subscriber additions would be lower than a year earlier.
Oilfield services provider SLB rose 1.9 per cent after strong second-quarter profit.
Declining issues outnumbered advancing ones on the NYSE by a 2.11-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favoured decliners.
The S&P 500 posted 27 new 52-week highs and four new lows; the Nasdaq Composite recorded 50 new highs and 99 new lows.
Volume on US exchanges was 10.54 billion shares, compared with the 11.72 billion average for the full session over the last 20 trading days.
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