US: Stocks fall as IT outage adds to angst

WALL Street stocks fell decisively for a second straight session on Friday (Jul 19) following a major IT outage that roiled many businesses at a time when analysts consider the market “overbought”.

Airlines, banks, TV stations and financial institutions were among those thrown into turmoil due to a faulty update to an antivirus program for Windows systems from American cybersecurity group CrowdStrike.

The outage added more uncertainty at a time when markets were already edgy over speculation that US President Joe Biden will withdraw from the 2024 campaign.

The Dow Jones Industrial Average finished down 0.9 per cent at 40,287.53.

The broad-based S&P 500 dropped 0.7 per cent to 5,505, while the tech-rich Nasdaq Composite Index declined 0.8 per cent to 17,726.94.

“The market was extremely overbought so it was just a matter of time before we had a pullback,” said Tom Cahill of Ventura Wealth Management.

“So far it has been relatively mild and I think earnings are going to be an important factor as to whether” the market keeps falling, Cahill said.

Among individual companies, Netflix fell 1.5 per cent despite adding eight million new subscribers in the second quarter. But some analysts said the company’s third-quarter revenue forecast was disappointing.

Among other companies reporting results, Travelers sank 7.7 per cent, while American Express fell 2.7 per cent and Schlumberger advanced 2 per cent.

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CrowdStrike, the cybersecurity company at the heart of the global outage, tumbled 11.1 per cent. CEO George Kurtz announced that a fix had been rolled out for the problem.

Starbucks jumped 6.9 per cent following a Wall Street Journal report that activist investor Elliott Investment Management had taken a stake in the coffee company. AFP