CrowdStrike (CRWD) experienced a significant setback with a flawed technical update, dropping 11.1% to $304.96. The flaw affected Microsoft's (MSFT) operating system, causing a 0.7% decline to $437.11. IT managers worldwide scrambled to fix the issue after CrowdStrike rolled back the update.
Major disruptions were reported at airports, emergency management systems, media companies, and various other businesses, affecting their normal operations.
This incident contributed to a lackluster day for the stock market. Negative earnings reports from Netflix (NFLX) (-1.5% to $633.34), American Express (AXP) (-2.7% to $242.52), and Travelers (TRV) (-7.7% to $203.54) also weighed heavily on the market.
Mega-cap stocks struggled to maintain gains, with the Vanguard Mega-Cap Growth ETF (MGK) ending down 0.6%, a 4.0% decline for the week.
The Philadelphia Semiconductor Index faced selling pressure, dropping 3.1% today and 8.8% for the week.
Despite losses in major indices, there was no widespread selling outside the semiconductor group and certain individual stocks. Buyers showed little conviction.
At the NYSE, decliners outpaced advancers by a 9-to-5 margin, and at Nasdaq by a roughly 13-to-7 margin.
Nine of the 11 S&P 500 sectors ended lower, with losses ranging from 0.1% (real estate) to 1.3% (information technology and energy). The health care sector (+0.5%) and utilities sector (+0.1%) showed relative strength. The equal-weighted S&P 500 and the market-cap weighted S&P 500 both declined 0.7%, while the Russell 2000 fell 0.6%.
The 2-yr note yield rose five basis points to 4.51%, and the 10-yr note yield increased five basis points to 4.24%. No significant U.S. economic data was released today.
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Today's News
Options trading volume is elevated again on GameStop (GME, Financial) and Sirius XM Holdings (SIRI, Financial), indicating increased volatility. The Bancorp (TBBK, Financial), CrossFirst Bankshares (CFB, Financial), and Emergent Bio (EBS, Financial) are among the most overbought stocks, while Helen of Troy (HELE, Financial), Five Below (FIVE, Financial), and Oaktree Specialty (OCSL, Financial) are the most oversold based on their 14-day Relative Strength Index. Short interest has surged on Beyond Meat (BYND, Financial) and Kohl's (KSS, Financial).
The Farnborough International Airshow is set to draw significant attention in the aviation sector this week. Key participants include Boeing (BA, Financial), Embraer (ERJ), Airbus (OTCPK:EADSF), and Textron (TXT). The event will also spotlight the eVTOL industry, featuring Vertical Aerospace (EVTL), Joby Aviation (JOBY), Supernal, and Lilium (LILM).
Tesla (TSLA) experienced a significant IT outage due to a glitch in CrowdStrike’s (CRWD) cybersecurity platform Falcon Sensor, affecting operations at its Austin, Texas and Sparks, Nevada factories. The update also caused widespread disruptions across various sectors including airlines, banks, and hospitals. Microsoft (MSFT) cloud services were heavily impacted as well.
Starbucks (SBUX) shares surged 7% following a Wall Street Journal report that activist investor Elliott Management has taken a substantial stake in the company. Elliott has been discussing strategies with Starbucks to enhance its share price amidst profit pressures from wages and promotional activities.
Disney (DIS) announced that Oracle (ORCL) CEO Safra Catz will step down from its board, reducing the board size to 11 directors from 12. This move comes as Disney continues to navigate through various strategic changes.
Shares of Advanced Micro Devices (AMD) continued their decline, marking seven straight sessions of losses. The semiconductor sector faced a collective market loss of nearly $500 billion after potential new U.S. export control measures were reported. AMD shares have lost over 14% in the past six sessions.
Former President Trump’s statement to end the electric vehicle mandate if re-elected caused shares of EV manufacturers like Rivian (RIVN), Tesla (TSLA), Lucid (LCID), Ford (F), and General Motors (GM) to decline. This policy shift could significantly impact the future of the EV industry.
A major IT outage, stemming from a CrowdStrike (CRWD) update, affected several financial firms including JPMorgan Chase (JPM), Bank of America (BAC), and Nomura Holdings (NMR). The outage disrupted trading and banking operations, leading to significant operational challenges.
Retail REIT Realty Income (O) and health care REIT Omega Healthcare Investors (OHI) ended their seven-session gain streak due to the same Microsoft (MSFT) outage. Both stocks had been gaining ahead of their quarterly earnings results and the potential for a September rate cut.
Bitcoin (BTC-USD) saw a significant rebound, climbing 15.9% for the week, driven by optimistic market sentiment following an assassination attempt on former President Trump. His choice of a pro-crypto vice presidential running mate also boosted the cryptocurrency’s outlook.
Serve Robotics (SERV) shares soared over 65% after Nvidia (NVDA) disclosed a stake in the company. Nvidia purchased 1.05 million shares for approximately $3.7 million, highlighting its interest in the robotics sector.
Verizon (VZ) and AT&T (T) are set to report their second-quarter results this week. Investors will focus on subscriber growth and profit margins. Verizon’s flexible pricing and streaming bundles have helped mitigate subscriber losses in a cautious spending environment.
Plug Power (PLUG) announced the pricing of its public offering of 78.7 million shares at $2.54 per share, aiming to raise approximately $200 million. The funds are expected to support the company's growth initiatives.
UPS (UPS) and FedEx (FDX) warned customers of potential delivery delays due to the global IT outage caused by CrowdStrike’s (CRWD) update. Both companies have implemented contingency plans to minimize the impact on their operations.
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