Stock Market Update

[BRIEFING.COM] In baseball it is three strikes and you're out. Today, unfortunately, many business around the globe have found out that it's one CrowdStrike (CRWD 305.82, -37.23, -10.8%) and they're out. 

The cyber security software firm put through a technical update that, regrettably, had a flaw in it and ultimately infiltrated the Microsoft (MSFT 436.99, -3.38, -0.8%) operating system, which caused huge disruptions for many businesses, including airlines, emergency management services, and media companies to name a few.

That flaw was identified fairly quickly and CrowdStrike rolled back its update, but the damage had been done. IT managers are now grappling with getting systems back up running smoothly; meanwhile, customers of the affected companies are in limbo until the problem can be fully corrected.

This news overshadowed most other news earlier this morning, which is a big statement considering Netflix (NFLX 638.38, -4.66, -0.7%), American Express (AXP 240.74, -8.46, -3.4%), Travelers (TRV 204.55, -16.06, -7.3%), and SLB Corp. (SLB 50.17, +1.45, +3.0%) were among the notable companies that have reported earnings since yesterday's close, the Republican National Convention wrapped up last night with former President Trump accepting the GOP's presidential nomination, and speculation continues to mount about President Biden's fate as the presidential nominee of the Democratic Party.

It was perhaps a good thing that there wasn't any U.S. economic data of note today, but even if there had been, we suspect it, too, would have been overshadowed.

The CrowdStrike issue has created another drag on sentiment, which was already dragging in connection with yesterday's broad-based sell-off. There has been some follow-through selling today, although the weakness in the major indices appears to have more to do with a lack of buying interest than it does with strong selling conviction.

The latter point notwithstanding, there is a burgeoning sense that the market is due for a consolidation/correction period after registering some hefty gains for the year through mid-July. Those gains, until recently, were built primarily on the back of the mega-cap stocks, which were unable to maintain today's opening gains. The Vanguard Mega-Cap Growth ETF (MGK) was up 0.6% but is now down 0.6%, leaving it down 4.0% for the week.

The Russell 2000 is down 0.4% on the heels of yesterday's 1.9% decline, but is up 2.0% for the week.

Nine of the 11 S&P 500 sectors are lower with losses ranging from 0.2% (real estate) to 1.1% (information technology). The health care (+0.4%) and communication services (+0.1%) sectors are the lone holdouts in positive territory.