Stocks tumbled on Thursday, with the S&P 500 dropping 0.8% and the Nasdaq Composite falling by 0.7%. The energy sector was the only gainer on the day, with all other sectors closing lower. The S&P 500 is down 1.3% for the week and the Nasdaq is off by 2.8%, following a recent closing high on Tuesday. The Russell 2000 and Dow Jones Industrial Average, which had been performing well, fell by 1.9% and 1.3% respectively on Thursday, with only three Dow stocks closing up.
Market volatility has been on the rise, as evidenced by the VIX jumping 28% this week following a 10% increase on Thursday. Concerns about political remarks affecting foreign trade and anxiousness about the upcoming earnings season have contributed to the increase in volatility. An overnight software update by CrowdStrike caused global outages, impacting companies such as McDonald’s and United Airlines. CrowdStrike shares fell around 10% in premarket trading as a result of the outages, which have been identified and a fix is being pushed out.
In terms of earnings, Netflix beat expectations on revenue and earnings for the second quarter, but guidance came in slightly lower than expected. Travelers Companies beat on earnings, though revenues were slightly below estimates, and American Express reported better than expected profits and raised full year forecasts. American Express shares are up around 2.5% in premarket trading. Earnings season will continue to ramp up next week, with companies like UPS, Spotify, Google parent Alphabet, Tesla, and Visa set to report.
Today marks a monthly options expiration, potentially leading to increased volatility. The expected move in the S&P 500 for the day is $16.50 based on premarket indications. The impact of the overnight software outage and President Joe Biden potentially dropping out of the race could also impact market sentiment. Incumbents dropping out of races is rare, with the last instance being in 1968 when Lyndon Johnson announced he would not seek reelection. Investors are advised to stick with their investing plans and long-term objectives amid market uncertainties.
