Marco Julian Serrano On Friday, US stocks plummeted when more information came out about a worldwide IT outage. The major averages could not make up for a selloff that led to the breaking of Dow Jones Industrial Average‘s winning streak. The falloff in technological stocks mainly caused the S&P 500 and Nasdaq to record their worst weekly losses since April.
State of the Market
The S&P 500 (^GSPC) decreased by 0.7%, and the tech focused Nasdaq Composite (^IXIC) fell by 0.8%. Both had their most challenging week since April. The Dow Jones Industrial Average (^DJI) saw a drop of nearly 1%.
- The S&P 500 and Nasdaq recorded weekly losses of roughly 2% and over 2%, respectively.
- The Dow finished the week on an upside note, despite dropping nearly 1% on Friday.
Effects of the Global IT Outage
In early trading hours, investors estimated how a “unmatched” collapse in computer systems worldwide could impact airlines, banks, telecoms, and media companies. CrowdStrike (CRWD) announced that they fixed the problem which originated from an incorrect update impacting Microsoft Based (MSFT) systems easing worries.
- CrowdStrike shares dipped as much as 20% but reduced their losses to end at minus 11%.
- Microsoft shares experienced less than a 1% decline.
Tech Stocks Meet Resistance
A shift away from technology led to it experiencing the bulk of sale offs. Chips targeting AI suffered a particular blow. Nvidia (NVDA) dipped more than 2% during the day, ending the week with a loss over 8%. ASML (ASML), a chip equipment producer, also saw a decline, recording a decrease of 17% over five days.
Geopolitical Strains
Saleoffs in semiconductors got worse because of international issues. Investors grew anxious about likely tighter US rules on semiconductor technology exports to China. Former President Donald Trump’s words regarding Taiwan being an essential chip manufacturing hub in an interview with Bloomberg intensified the selloff.
Electric Vehicle Stocks Impacted
Comments from former President Trump at the Republican Convention put pressure on electric vehicle shares. Trump criticised President Biden’s clean energy projects, naming them “green new scam” and promising to “eliminate the electric vehicle mandate from day one.”
- Tesla’s (TSLA) shares took as much as 4% hit.
- Rivian (RIVN) and Lucid (LCID) saw decreases of more than 1% too.
Different Market Movements
Nearly all sectors in the S&P 500 faced declines on Friday, Technology (XLK) and Consumer Discretionary (XLY) stocks were hit hardest. The Materials Sector(XLB)’s performance also decreased by 1%, while Healthcare(XLV) managed to record slight gains.
Oil Prices Fluctuate
Crude oil dropped by 3%, losing its previous weekly gains. West Texas Intermediate settled at $80.13 per barrel whereas Brent set at just beyond $82.63 per barrel.A firmer dollar and limited information about stimulus for China, the most significant consumer of crude, led to pressurised futures.
Bitcoin Rises
While other asset classes saw a downfall, Bitcoin (BTCUS) increased by more than 4%, reaching nearly $66,000 per token. Crypto Associated stocks also rose, with Riot Platforms(RIOT), MicroStrategy(MSTR), and Coinbase(COIN) all increasing by at least 10%.
Netflix
The streaming giant’s shares surged the most since late January only to decrease later. Netflix’s memberships expanded by 34% quarter on quarter as a result of dissolving the basic plan in specific markets. The stock grew as much as 3% in early trading before losing these gains.
American Express
American Express (AXP) had a strong quarter and has intentions to increase its marketing budget from $800 million to $6 billion this year. Despite future doubts related to upcoming elections, CEO Stephen Squeri remains confident about the second half of this year.
What Comes Next?
Investors will gain insight about consumer behaviour and economy next week when more companies disclose their quarterly results like,
- CocaCola (KO)
- UPS (UPS)
- Tesla (TSLA)
Fresh geopolitical issues and recent tech sector downturn make investors eagerly anticipate these reports for signs of either stability or continuing volatility.
