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Financial Markets                      07/19 15:43

   

   NEW YORK (AP) -- U.S. stocks slumped Friday in another washout, as 
businesses around the world scrambled to contain the effects of a disruptive 
technology outage.

   The S&P 500 fell 0.7% to close its first losing week in the last three and 
its worst since April. The Dow Jones Industrial Average dropped 377 points, or 
0.9%, while the Nasdaq composite sank 0.8%.

   It was only on Tuesday that the S&P 500 set its latest all-time high. At 
first, pressure built on the Big Tech stocks that have been the market's 
biggest winners, amid criticism they simply grew too expensive. Nvidia, for 
example, is still up 138% this year amid a frenzy around 
artificial-intelligence technology, even after falling 2.6% Friday and 8.8% 
over the week.

   Gains for previously unloved areas of the market had helped to offset some 
of those declines: Smaller stocks and companies whose profits are closely tied 
to the economy's strength were rising. That sparked hopes for a market where 
more stocks are rising, rather than just a handful of dominating elites, which 
market watchers say would be healthier.

   "This rotation can continue, but it doesn't always have to be where they're 
rising faster, it could be because they are falling less," according to Brian 
Jacobsen, chief economist at Annex Wealth Management.

   Momentum for those beaten-down areas of the market may be sputtering. The 
Russell 2000 index of smaller stocks fell 0.6% Friday for its third straight 
drop, following its huge five-day run where it shot up 11.5%. Three out of 
every four stocks in the S&P 500 also sank.

   Friday's moves came as a major outage disrupted flights, banks and even 
doctors' appointments around the world. Cybersecurity firm CrowdStrike said the 
issue believed to be behind the outage was not a security incident or 
cyberattack and that it had deployed a fix. The company said the problem lay in 
a faulty update sent to computers running Microsoft Windows.

   CrowdStrike's stock dropped 11.1%, while Microsoft's lost 0.8%.

   Richard Stiennon, a cybersecurity industry analyst, called it a historic 
mistake by CrowdStrike, but he also said he did not think it revealed a bigger 
problem with the cybersecurity industry or with CrowdStrike as a company.

   "We all realize you can fat finger something, mistype something, you know 
whatever -- we don't know the technical details yet of how it caused the 
bluescreen of death" for users, he said.

   "The markets are going to forgive them, the customers are going to forgive 
them, and this will blow over."

   Crowdstrike's stock trimmed its loss somewhat through the day, but it still 
turned in its worst performance since 2022. Stocks of rival cybersecurity firms 
climbed, including a 7.8% jump for SentinelOne and a 2.2% rise for Palo Alto 
Networks.

   The outage hit check-in procedures at airports around the world, causing 
long lines of frustrated fliers. That initially helped pull down U.S. airline 
stocks, but they quickly pared their losses. United Airlines flipped to a gain 
of 3.3%, for example. It said many travelers may experience delays, and it 
issued a waiver to make it easier to change travel plans.

   American Airlines Group slipped 0.4%, and Delta Air Lines rose 1.2%.

   Comerica dropped 10.5% for one of the market's sharper losses, even though 
it delivered better earnings for the spring than analysts expected. The bank 
said it received a preliminary notification that it won't continue as the 
issuer of the Direct Express debit card for about 4.5 million federal benefit 
recipients, a program it's had since 2008.

   American Express sank 2.7% after its revenue for the latest quarter fell 
short of analysts' forecasts. It was one of the largest reasons for the Dow's 
drop, despite reporting stronger profit than expected.

   Halliburton fell 5.6% after the provider of services to the energy industry 
matched analysts' expectations for profit last quarter but missed for revenue.

   Rival SLB was on the winning side of Wall Street after reporting stronger 
profit than expected, and its rose 1.9%.

   All told, the S&P 500 fell 39.59 points to 5,505.00. The Dow dropped 377.49, 
or 0.9%, to 40,287.53, and the Nasdaq lost 144.28 to 17,726.94.

   In the bond market, yields ticked higher. The yield on the 10-year Treasury 
rose to 4.23% from 4.20% late Thursday.

   In markets abroad, indexes were mostly lower in Europe and Asia.

   Stocks fell 2% in Hong Kong and rose 0.2% in Shanghai after Chinese 
officials briefed reporters in Beijing on the outcome of a top-level meeting of 
the ruling Communist Party. They provided some details of the sweeping 
blueprint it endorsed for making China a leader in technology, building its 
financial markets and raising living standards.

   ___

   AP Writers Matt Ott, Elaine Kurtenbach and Alan Suderman contributed.

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