C.I.O Robert Schein on The Wall Street Journal

By Blanke Schein Wealth Management on July 19, 2024

U.S. stocks declined Friday after a global technology outage shut down airports and disrupted businesses around the world. 

The tech-heavy Nasdaq Composite fell 0.9% in afternoon trading, extending its weekly decline to 3.8%. The S&P 500 dropped 0.8%. The Dow Jones Industrial Average shed 400 points, or 1%. The blue-chip benchmark is the only of the three major indexes poised to eke out a weekly gain. 

CrowdStrike CRWD -13.11%decrease; red down pointing triangle, a provider of malware and virus protection to a large array of companies, filed an update that caused outages for millions of users of Microsoft MSFT -0.53%decrease; red down pointing triangle Windows devices worldwide. The outage knocked out operations for banks, media companies and emergency services and forced airlines to ground flights. 

CrowdStrike’s chief executive later said a fix had been deployed, but shares of the cybersecurity-software company tumbled 12%. The stock was the worst performer in the S&P Friday. Microsoft fell 1%. 

The news also sent CrowdStrike rivals SentinelOne and Palo Alto Networks higher, with the stocks up 8.3% and 1.4%, respectively. 

Despite the cyber outage, trading functioned normally across U.S. exchanges. Some financial companies, such as the London Stock Exchange, reported earlier issues. Visa said its systems were working normally but it was aware of reported difficulties with payments.

The outage marked a dramatic final day to a volatile trading week. Investors have been rotating out of megacap tech stocks and into areas of the market that could benefit from potential rate cuts, such as shares of small companies and more economically sensitive sectors. The small-cap Russell 2000 index is up 1.8% for the week, outperforming the major indexes.  

Callie Cox, chief market strategist at Ritholtz Wealth Management, said the “everything else but tech rally” has room to run. As price pressures moderate and the U.S. economy remains strong, the Federal Reserve now has ample reasons to cut interest rates, she said. 

“If rate cuts are still in the near future, the inflation data keeps cooling and the job market stays strong, I wouldn’t be surprised to see this everything else rally run further,” she said. 

Still, some investors are bracing for heightened market volatility in the days ahead, citing the uncertainty around November’s presidential election and the Fed’s monetary policy. 

Robert Schein, chief investment officer at Blanke Schein Wealth Management, said he has positioned his clients’ portfolios with a large percentage of cash and Treasurys in anticipation of a choppier market in the second half of the year. 

Benchmark 10-year Treasury yields ticked higher to 4.238%, from 4.188% Thursday. 

Bitcoin, the largest cryptocurrency, jumped 5% to $66,794.56.

In corporate news, Travelers dropped 7.3% after the insurer reported weaker-than-expected revenue. American Express fell 2.7% after the credit-card company’s revenue fell short of analyst estimates. 

Global stocks largely retreated. The Stoxx Europe 600 fell 0.8%, while Hong Kong’s benchmark index fell more than 2%.

https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-07-19-2024-a4483d28