Page One
The past week has been anything but dull in the stock market, and things have gotten a little more exciting this morning. Ironically, that characterization doesn't have so much to do with the earnings report from Netflix (NFLX) as it does with the news that a CrowdStrike (CRWD) technical update had a bug in it that infiltrated Microsoft's (MSFT) operating system, which in turn triggered what is being labeled a "global IT outage."
Shares of CRWD are down 13% while shares of MSFT are down 1.3%.
Various reports have pointed to loads of problems for airports and airlines as a result, yet the outage has reached far and wide across businesses and has manifested itself for individuals trying to log on to their PCs and seeing the "blue screen of death."
CrowdStrike said it identified the bug and rolled back its technical update, so many systems are coming back online.
This bug, however, overshadowed most other news items earlier this morning, including the uncertainty surrounding President Biden's decision to stay in the presidential race, former President Trump last night accepting the GOP's nomination for president, and the earnings reports from Netflix, American Express (AXP), Travelers (TRV), SLB Corp (SLB), and PPG Industries (PPG).
Those reports were greeted with mixed reactions, which is contributing to the mixed tone of the equity futures market.
Currently, the S&P 500 futures are up 9 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 38 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down 68 points and are trading 0.2% below fair value.
There is no U.S. economic data of note today; however, two FOMC voters -- New York Fed President Williams and Atlanta Fed President Bostic -- will be speaking at 10:40 a.m. ET and 1:00 p.m. ET, respectively.
Their remarks will be watched closely for monetary policy leanings, which will have some sway on a Treasury market that is expecting the Fed to cut rates before the end of the year.
The 2-yr note yield is up three basis points this morning to 4.49%, but it is down 23 basis points for the month, keying off some relatively friendly inflation data. The 10-yr note yield is up two basis points to 4.21% and down 16 basis points for the month.
That downshift in market rates, predicated on the market's belief that the Fed's policy rate will be lowered, has been instrumental in driving a prominent rotation trade that has favored the small-cap and value stocks at the expense of the mega-cap stocks and many of the growth stocks that had been previously favored by the momentum crowd.
Everything, though, got caught up in a consolidation trade yesterday, which in some cases was an extension of the consolidation trade that hit on Wednesday as well. Even so, the Russell 2000 remains up 2.3% for the week while the equal-weighted S&P 500 enters today up 0.6% for the week.
Market participants will be watching today's price action closely to see if there is a buy-the-dip inclination or a continued bid to take some money off the table.
