CROWDSTRIKE OUTAGE: Wall St cops big tech downturn as CrowdStrike slumps in mass outage fallout
Wall Street’s main indexes have fallen, deepening a sell-off driven by tech stocks and mixed earnings, while investors assessed the impact of a global cyber outage that knocked down CrowdStrike’s shares to an over two-month low.
Cybersecurity firm CrowdStrike slumped 11.2 per cent on Friday after an update to one of its products appeared to trigger an outage that affected customers using Microsoft’s Windows Operating System, disrupting businesses across sectors.
Major US airlines ordered ground stops citing communication issues, with the Euronext exchange and London Stock Exchange Group’s Workspace news and data platform also facing issues. LSEG later said its data and services were back online.
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By continuing you agree to our Terms and Privacy Policy.Microsoft slipped 0.7 per cent to an over one-month low, on track for a four-day decline, driven by a rout in tech stocks.
“Any hint of bad news, because they (tech stocks) are so priced to perfection is going to hurt these stocks, both (CrowdStrike and Microsoft) are excellent companies and are worthwhile long-term holds,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
The disruption comes after two gruelling sessions for Wall Street, as investors assessed second-quarter earnings and a move away from megacaps that have primarily driven the equity rally in 2024.
Megacaps were largely mixed, with Nvidia and Amazon.com losing one per cent and 0.5 per cent, while Apple and Alphabet gained one per cent each.
Chip stocks also struggled for direction. US-listed shares of Taiwan Semiconductor Manufacturing were down nearly 1.5 per cent, while Arm Holdings jumped three per cent.
Over the past two sessions, the Nasdaq has dropped 3.5 per cent and the S&P 500 has fallen 2.1 per cent, keeping the indexes on track for weekly losses.
Signalling investor unease, the VIX - Wall Street’s “fear gauge” - was trading at its highest since early May.
Investors will also await comments from Federal Reserve officials John Williams and Raphael Bostic for hints on the policy path later in the day.
Markets have priced in a 25-basis-point interest-rate cut by September and expect two cuts by year-end according to LSEG data.
In early trading on Friday, the Dow Jones Industrial Average was down 179.14 points, or 0.44 per cent, at 40,485.88, the S&P 500 was down 2.69 points, or 0.05 per cent, at 5,541.90, and the Nasdaq Composite was down 18.08 points, or 0.10 per cent, at 17,853.15.
Meanwhile, other cybersecurity shares rose, with Palo Alto Networks rising 1.5 per cent and SentinelOne up 6.4 per cent.
Eli Lilly jumped 2.6 per cent after China approved its weight-loss drug tirzepatide, while Intuitive Surgical rose eight per cent after second-quarter results beat.
That helped the S&P 500 healthcare index lead sectoral gainers.
Netflix fell one per cent in choppy trading after the streaming giant cautioned that third-quarter subscriber additions would be lower than a year earlier.
0ilfield services provider SLB rose 1.3 per cent after strong second-quarter profits.
S&P 500 companies that have reported second-quarter earnings to date recorded an 85 per cent beat rate, with the growth rate standing at 11.1 per cent.
Declining issues outnumbered advancers for a 1.40-to-1 ratio on the NYSE and for a 1.19-to-1 ratio on the Nasdaq.
The S&P index recorded 27 new 52-week highs and three new lows, while the Nasdaq recorded 16 new highs and 33 new lows.
