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U.S. stocks closed lower on Friday, in the wake of an outage that roiled operations at companies across multiple industries, from airlines to healthcare to government agencies worldwide.
The outage stemmed from an update by cybersecurity firm Crowdstrike to Microsoft Windows hosts, Crowdstrike said on its website. “This is not a security incident or cyberattack,” it noted on its website. Microsoft also said all its systems were “up and running.”
By the time New York trading opened, most companies were becoming operational again but still catching up. Crowdstrike shares closed down 11.1% at $304.96, with analysts predicting the outage would cost the company money to fix and restore trust with its customers. It was the lowest close for the shares since May 2.
Microsoft shares fared better, closing down only 0.74% at $437.11.
Widespread economic impact from the outage is expected to be small, even though many companies were still trying to resume full operations by the time the stock market closed.
“The global IT outages affecting Windows software are causing huge temporary disruption to certain sectors including travel and healthcare, but while things are still very uncertain, we do not anticipate a major macroeconomic or financial market impact at this stage,” said Jennifer McKeown, chief global economist at research firm Capital Economics, in a note earlier in the day.
Since the outage wasn’t due to “a cyber attack and has not affected all software by any stretch, the implications should be significantly smaller,” she said.
Crowdstrike shares tumble on outage
Crowdstrike shares slid after analysts predicted the company would have to pay to clean up the outage it created.
“This could be an expense burden for Crowdstrike given it has to invest to clean up the issue and potentially dispense credits which could impact margin,” Jefferies analysts wrote in a note.
“Furthermore, this will lead to reputational damage, particularly for mission critical infrastructure and government customers,” it said.
However, the investment bank continues to rate the shares a buy.
Which companies are still recovering?
A sample of ongoing disruptions as of 5:15 p.m. ET include:
- Delta Airlines’ website remains unavailable.
- FedEx says on its website it “has activated contingency plans to mitigate impacts from a global IT outage experienced by a third party software vendor” and warned “potential delays are possible for package deliveries with a commitment of July 19.”
- United Airlines’ website said it was “resuming some flights but expect schedule disruptions to continue throughout Friday. We have issued a waiver to make it easier for customers to change their travel plans via united.com or the United app.”
- Starbucks order ahead online remains down.
S&P 500, Dow, Nasdaq fall but unrelated to outage
All three major stock indices – the S&P 500, Dow Jones Industrial Average and Nasdaq – all closed lower, continuing their recent weakness unrelated to the massive IT outage caused by Crowdstrike.
Investors remained focused on earnings, which have come in mixed, analysts said. American Express shares fell after the credit card company missed earnings forecasts while Netflix topped forecasts when it reported earnings last night.
American Express shares ended down 2.75% to $242.38, while Netflix gave up early gains to end 1.51% lower at $633.34.
Investors also continued to take profits from recent high-flying technology stocks to move into smaller stocks, which are seen as benefitting from lower interest rates, analysts said. The Federal Reserve is expected to start cutting rates in September with inflation and the jobs market cooling.
S&P 500 ended down 39.59 points to 5,505.00 to score its worst week since April. The Dow closed down 337.49 points to 40,287.53 and Nasdaq was down 144.28 points to 17,726.94.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.