FILE – The New York Stock Exchange is shown on July 16, 2024, in New York. Shares have fallen in Asia on Friday, July 19, 2024, after a broad washout across Wall Street dragged U.S. stocks lower. (AP Photo/Peter Morgan, File)
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 stock 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.
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AP Writers Matt Ott, Elaine Kurtenbach and Alan Suderman contributed.