U.S. Stocks See Further Downside Following Major IT Outage

Stocks moved mostly lower during trading on Friday, with the Nasdaq and the S&P 500 extending the steep drop seen over the two previous sessions. The narrower Dow also moved to the downside, pulling back further off the record closing high set on Wednesday.

The major averages all finished the day firmly in negative territory. The Dow slumped 377.49 points or 0.9 percent to 40,287.53, the Nasdaq slid 144.28 points or 0.8 percent to 17,726.94 and the S&P 500 fell 39.59 points or 0.7 percent to 5,505.00.

For the week, the major averages turned in a mixed performance. The tech-heavy Nasdaq plunged by 3.7 percent and the S&P 500 tumbled by 2.0 percent, but the Dow climbed by 0.7 percent.

With concerns about the outlook for tech stocks recently weighing on Wall Street, negative sentiment may have been generated by a major IT outage.

The operations of major banks, media outlets, hospitals and airlines worldwide were affected due to the widespread outage, which was purportedly caused by an update by cybersecurity firm CrowdStrike (CRWD).

“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts,” the company’s CEO George Kurtz said on X. “Mac and Linux hosts are not impacted.”

“This is not a security incident or cyberattack,” he continued. “The issue has been identified, isolated and a fix has been deployed.”

Shares of CrowdStrike plunged by 11.1 percent, while shares of Microsoft (MSFT) have also moved to the downside as many of the software giant’s users have also been impacted by the issue.

“The underlying cause has been fixed, however, residual impact is continuing to affect some Microsoft 365 apps and services. We’re conducting additional mitigations to provide relief,” Microsoft said on X.

Overall trading activity was somewhat subdued, however, with a lack of major U.S. economic keeping some traders on the sidelines.

Sector News

Semiconductor stocks saw substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 3.1 percent to its lowest closing level in over a month.

A steep drop by the price of crude oil also contributed to significant weakness among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index falling by 1.4 percent and 1.2 percent, respectively.

Considerable weakness was also visible among computer hard stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Computer Hardware Index.

Gold, networking and tobacco stocks also saw notable weakness, while pharmaceutical stocks regained ground following Thursday’s sell-off.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while Hong Kong’s Hang Seng Index tumbled by 2.0 percent.

The major European markets also moved to the downside on the day. While the German DAX Index slumped by 1.0 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index slid by 0.7 percent and 0.6 percent, respectively.

In the bond market, treasuries pulled back further off their recent highs following yesterday’s weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.0 basis points to 4.239 percent.

Looking Ahead

A report on personal income and spending in the month of June is likely to be in focus next week, as it includes readings on inflation said to be preferred by the Federal Reserve.

Leading up to the release of the report next Friday, earnings news is likely to attract attention, with Coca-Cola (KO), Alphabet (GOOGL), Tesla (TSLA), and IBM Corp. (IBM) among the companies due to report their quarterly results.

Business News