U.S. Stocks closed lower, extending a slump that left Wall Street with its worst week since April.
The S&P 500 fell 0.7% Friday, its third straight drop since setting a record high on Tuesday. The Dow Jones Industrial Average sank 0.9%, and the Nasdaq composite lost 0.8%. The losses came as businesses around the world scrambled to contain the effects of a disruptive technology outage.
Cybersecurity firm CrowdStrike sank after saying the issue believed to be behind the global outage affecting flights, banks and medical offices lay in a faulty update sent to computers running Microsoft Windows. Treasury yields ticked higher.
CrowdStrike’s stock plunged more than 15% as soon as trading began, but it then pared its loss to a drop of 12.2%. Microsoft was down 0.9%.
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.”
Stocks of other cybersecurity firms climbed, including an 8.1% jump for SentinelOne and a 1.7% 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 1.6%, 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 0.8%, and Delta Air Lines was unchanged.
Corporate profit reports were also moving stock prices, and Comerica dropped 10.5% 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 3.3% 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.
Netflix was flipping between gains and losses after the streaming giant reported stronger profit for the latest quarter than analysts expected. It was most recently down 2.1%.
The broad S&P 500 index is on track for its worst week since April, even though it set an all-time high on Tuesday. 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 up nearly 140% for the year so far amid Wall Street’s frenzy around artificial-intelligence technology, even after falling 2.5% Friday.
Such declines pack a punch on the S&P 500 because the index gives more weight to stocks with larger values, and Big Tech companies are Wall Street’s most massive by far. Gains for some previously unloved areas of the market, including smaller stocks and companies whose profits are closely tied to the economy’s strength, had helped to offset some of those declines.
“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.
On Thursday, Wall Street saw a washout that pulled down most stocks across the market, including beaten-down smaller companies and what are called “value” stocks.
The Russell 2000 index of smaller stocks was on track for a third straight drop Friday after slipping another 0.5%. That follows a huge five-day run where it shot up 11.5%.
Besides the surges for Big Tech stocks, hopes for coming cuts to interest rates by the Federal Reserve have also buoyed the U.S. Stock market and sent Treasury yields lower.
Yields ticked higher in the bond market on Friday. 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.
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AP Writers Matt Ott, Elaine Kurtenbach and Alan Suderman contributed.