Tech outage leads to decline in Dow and tech stocks, rebound seen after fix
From Yahoo Finance: 2024-07-19 13:06:47
US stocks saw a decline on Friday as concerns over a global IT outage subsided, with the Dow Jones Industrial Average falling by 0.9% and the S&P 500 and Nasdaq Composite dropping 0.5%. The tech rout continued, leading investors to rotate out of tech stocks and into small caps as they assess the impact of the computer system failure that affected various industries. CrowdStrike shares plunged up to 20% due to the glitch that predominantly affected Microsoft-based systems, but stocks rebounded following news that a fix was in place. Meanwhile, former president Donald Trump stated his intention to end the “electric vehicle mandate,” causing a dip in Tesla and other EV stocks despite an endorsement from Tesla CEO Elon Musk.
Various S&P 500 sectors plummeted on Friday, with Technology and Consumer Discretionary leading the declines by 11:45 AM ET, while the Materials Sector also faced a 1% decrease. Only the Healthcare sector experienced a slight increase. Netflix shares surged after the company posted strong quarterly results, with memberships growing by 34% quarter-on-quarter, spurring the stock up by 3% at the open before retracting. CrowdStrike shares tumbled due to the global IT outage, dropping by 10% as the company worked on rectifying the system defect. The stock market was relatively unchanged on Friday following the global IT outage, with the Dow Jones down by 0.2%, the S&P 500 flat, and the Nasdaq down by 0.2%. Investors awaited details on the composure of the system failure that affected CrowdStrike and Microsoft-based platforms. American Express CEO Stephen Squeri announced a marketing budget increase to $800 million despite no change in caution for the second half of the year.
Aside from the news related to Trump’s RNC speech, Hulk Hogan’s shirt-ripping stunt, and Cloudflare’s outage, Netflix earnings were the focus following a slight drop in stock price due to guidance concerns for the third quarter. Jefferies tech analyst Brent Thill noted that a slowdown in subscriber growth should not be alarming given the substantial growth from password sharing in the last 12 months. He expected subscriber growth to accelerate in Q4, driven by a strong content slate and better seasonality compared to Q3.
Read more at Yahoo Finance: Dow drops in wake of global outage