S&P 500, Nasdaq post sharpest weekly losses since April amid tech rout

afeera.netJuly 19, 2024

42 7 minutes read

US stocks fell on Friday as more details over a global IT outage trickled in and the major averages failed to recover from a sell-off that saw the Dow snap a run of wins.

The S&P 500 (^GSPC) fell 0.7% while the tech-heavy Nasdaq Composite (^IXIC) declined 0.8%. Both the Nasdaq and S&P 500 posted their worst week since April. The Dow Jones Industrial Average (^DJI) slipped almost 1%.

Stocks fell after a wobbly handful of sessions that saw a dive in tech, with AI-focused chip stocks bearing the brunt. Investors are rotating out of the tech heavyweights that have fueled the recent rally and into small caps, seen by some as benefiting more from interest-rate cuts.

In the early hours, investors assessed the potential impact of an “unprecedented” failure in computer systems worldwide that grounded flights and hit banks, telecoms and media companies, among others. But concerns eased after CrowdStrike (CRWD) said a fix was in place for the glitch, a botched update that affected Microsoft-based (MSFT) systems.

CrowdStrike shares plunged as much as 20% as the outage spread, but pared losses to 11%. Shares of Microsoft — which was working on problems with its Azure cloud services — were down less than 1%.

Meanwhile, Republican presidential contender Donald Trump used his nomination speech on Thursday to say he would “end the electric vehicle mandate on day one.” His comment comes as the market wakes up to the “Trump trade” — the implications of his policies for assets if the former president takes the White House.

Next week investors will get another glimpse at the state of the consumer and economy when more earnings roll in, including quarterly results from beverage giant Coca-Cola (KO), delivery service UPS (UPS) and EV maker (TSLA).

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Fri, July 19, 2024 at 1:04 PM MST

S&P 500 and Nasdaq down for the week amid tech rout

The S&P 500 (^GSPC) closed out its worst week since April as technology sold off.

The broad-based index fell 0.7% on Friday with losses of almost 2% for the week. The tech-heavy Nasdaq Composite (^IXIC) slipped 0.8%.

The Dow Jones Industrial Average (^DJI) fell almost 1% on Friday but still managed to end the week in positive territory.

Technology stocks led the sell-off as investors continued to rotate out of the space. Chips were under pressure once again, ending the week with heavy losses.

On Friday investors assessed the impact of an “unprecedented” failure in computer systems that work with CrowdStrike (CRWD) and Microsoft-based (MSFT) platforms. The global IT outage impacted a slew of entities including airlines and hospitals. CrowdStrike CEO George Kurtz said a fix was in place for the glitch.

More earnings start rolling in next week, with snacks and beverage giant Coca-Cola (KO), delivery service UPS (UPS), and EV maker Tesla (TSLA) all set to report quarterly results.
Fri, July 19, 2024 at 12:30 PM MST

Oil falls 3%, erases gains from earlier in the week

Crude oil fell 3%, losing its gains from earlier this week.

West Texas Intermediate (CL=F) settled at $80.13 per barrel while Brent (BZ=F), the international benchmark price, dropped to just above $82.63 per barrel.

A higher dollar and a lack of details over stimulus for China, the world’s largest customer of crude, put pressure on futures on Friday.

Earlier this week oil rose after a bigger-than-expected drop in US inventories.
Fri, July 19, 2024 at 11:45 AM MST

Bitcoin surges to $66,000 per token

As other asset classes declined on Friday, bitcoin (BTC-US) rose more than 4% to hover near $66,000 per token.

Crypto-related stocks also rose during the session. Riot Platforms (RIOT), MicroStrategy (MSTR), and Coinbase (COIN) each climbed at least 10%.
Fri, July 19, 2024 at 11:00 AM MST

Chip stocks slip again, set to end week with heavy losses

Chip stocks retreated on Friday, set to end the week heavily in the red.

Nvidia (NVDA) dropped more than 2% during the session. The AI heavyweight is on pace to end the week with losses of more than 8%.

Chip equipment maker ASML (ASML) also declined on Friday, on track to tally a decline of 17% over the past five sessions.

The sell-off in semiconductors went into full gear earlier this week as geopolitical headwinds emerged. Investor worries grew over a report regarding the possibility of tighter US restrictions on exports of semiconductor technology to China.

Recent comments from former President Donald Trump during a Bloomberg interview about Taiwan, a major chip manufacturing hub, also helped spur a sell-off.

Chip losses over the past 5 sessions, as of 1:45 p.m ET on Friday
Fri, July 19, 2024 at 10:14 AM MST

Nvidia, Tesla lead losses on Nasdaq 100

The Nasdaq 100 (^NDX) sank to a session low, down roughly 1% on Friday.

EV manufacturer Tesla (TSLA) dropped more than 4% while shares of chipmaker Nvidia (NVDA) sank more than 2%.

Other semiconductors also dropped with Intel (INTC) falling more than 5% and ASML (ASML) declining 3%.

Nasdaq 100 sank roughly 1% by 1:00 p.m. ET on Friday.
Fri, July 19, 2024 at 9:30 AM MST

Tesla falls 4% after Trump says he will end ‘electric vehicle mandate’

Electric vehicle stocks were under pressure on Friday after former President Donald Trump criticized the Biden administration’s clean energy initiatives, referring to them as the “green new scam” during the Republican Convention.

Trump said, “I will end the electric vehicle mandate on day one, thereby saving the US auto industry from complete obliteration, which is happening right now, and saving US customers thousands and thousands of dollars per car.”

The comments were made despite an endorsement from Tesla (TSLA) CEO Elon Musk. Shares of the EV giant sank as much as 4% on Friday. Rivian (RIVN) and Lucid (LCID) were also down more than 1%.

The Biden administration doesn’t have an EV mandate, but critics point to the Environmental Protection Agency’s auto rules aimed at lowering carbon emissions introduced in March as a way of accelerating electric vehicle mass adoption.
Fri, July 19, 2024 at 8:51 AM MST

Tech and Consumer Discretionary lead declines

Almost all the S&P 500 sectors fell on Friday, with Technology (XLK) and Consumer Discretionary (XLY) stocks leading the declines.

The Materials Sector (XLB) was also down by 1%. All three major averages were in the red by 11:45 a.m ET.

Healthcare (XLV) was the only sector slightly higher.
Fri, July 19, 2024 at 8:00 AM MST

Netflix shares gain following quarterly results

Netflix (NFLX) shares jumped the most since late January at the open before paring gains after the streaming giant posted better-than-expected quarterly results.

Netflix memberships grew 34% quarter on quarter, boosted in part by the removal of the basic plan in certain markets.

Netflix were up as much as 3% in early trading before giving up those gains.
Fri, July 19, 2024 at 7:16 AM MST

CrowdStrike falls 10% following global IT outage

CrowdStrike (CRWD) shares were down as much as 10% on Friday following an “unprecedented” failure in computer systems that impacted everything from airlines to hospitals.

Early on Friday CrowdStrike CEO George Kurtz said a fix was in place for the glitch.

On social media platform X, Kurtz wrote “CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts.”
Fri, July 19, 2024 at 6:32 AM MST

Stocks little changed after global IT outage

Stocks were little changed on Friday as more details emerged about a global IT outage. Wall Street was struggling to recover from a sell-off that left all major averages in the red on Thursday.

The Dow Jones Industrial Average (^DJI) slipped 0.2% after dropping more than 1% in the prior session.

The S&P 500 (^GSPC) hovered around the flatline, while the tech-heavy Nasdaq Composite (^IXIC) slipped 0.2%.

Investors have been rotating out of tech stocks this week with AI focused chip stocks leading to the downside.

Early this morning investors assessed the impact of an “unprecedented” failure in computer systems that work with CrowdStrike (CRWD) and Microsoft-based (MSFT) platforms.

CrowdStrike CEO George Kurtz said a fix was in place for the glitch. He said “CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts.”
Fri, July 19, 2024 at 5:26 AM MST

Off the phone with: American Express CEO

Another solid quarter from American Express (AXP) will see it hike its marketing budget by $800 million this year to $6 billion, CEO Stephen Squeri just told me by phone.

He also had this to say on whether he is thinking more cautiously on the second half of the year because of the election:

“If I was baking in more caution, I wouldn’t have raised the guidance. I wouldn’t be increasing the marketing and so forth. I think we’ll just be consistent and I think that’s the key point here. The Fed will do what the Fed is going to do probably in September. I certainly is not going to raise rates, they’ll probably be cut, they’ll probably be another cut before the end of the year. I think that’ll help you know, consumer confidence. I think we’ll see whatever happens in the election in November, which I don’t think anybody has any idea and the reality is this company has been around for 174 years with 30 presidents — we’ll get through whatever is we need to get through.”
Fri, July 19, 2024 at 2:54 AM MST

In other news…

In news not related to Trump’s RNC speech, Hulk Hogan ripping his shirt off at the event moments earlier, and CrowdStrike’s (CRWD) outage wreaking havoc on life (and its stock price) this morning…

We DID have Netflix earnings last night, which Yahoo Finance’s Alexandra Canal breaks down here. The stock is down slightly in the premarket, with some concern on third quarter subscriber guidance.

Here’s what Jefferies tech analyst Brent Thill had to say on this front:

“We don’t think [guidance is a problem]. Given the massive growth over the last 12 months from password sharing (+39M net adds), a slowdown in sub growth shouldn’t be surprising. It is worth highlighting that the 8M net adds in Q2 was the strongest Q2 the company has reported except for Q2’20. We expect Q4 sub growth to accelerate to 7.7M net additions given the content slate (Squid Game S2, NFL Games) and better seasonality in Q4 vs. Q3.”

Makes sense to me.