U.S. stock index futures pointed to a mixed open in choppy trading on Friday as investors paused after a two-day selloff and assessed the impact of a sweeping global tech outage that weighed heavily on CrowdStrike shares.
An update to one of CrowdStrike's products appeared to be the trigger for the cyber outage that affected customers using Microsoft's Windows Operating System, disrupting businesses across sectors and sending the cybersecurity firm's shares down 12.6% in premarket trading.
Major U.S. airlines ordered ground stops citing communication issues, while the Euronext exchange and London Stock Exchange Group's Workspace news and data platform also faced issues.
LSEG said its data and services were back online, while the Nasdaq said it expected U.S. markets to open normally.
Microsoft shed 1.2%, on track for its fourth straight day of losses driven by a rout in tech stocks.
"Any hint of bad news, because they're (tech stocks) so priced to perfection is going to hurt these stocks, both (CrowdStrike and Microsoft) are excellent companies and are worthwhile long-term holds," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
The disruption comes after two grueling sessions for Wall Street, as investors assessed second-quarter earnings and a move away from megacap tech stocks that have primarily driven the equity rally in 2024.
Megacap stocks were largely mixed, with Nvidia and Amazon.com losing 0.2% each, while Apple and Alphabet gained 0.9% and 0.8%.
"We're in a scenario where finally the markets realized that there's better opportunities in other places... now profit-taking in Big Tech has created this rotation," Blancato said.
Chip stocks also struggled for direction. U.S.-listed shares of Taiwan Semiconductor Manufacturing were down nearly 1%, while Arm Holdings jumped 2.8%.
Over the past two sessions, the tech-laden Nasdaq has fallen 3.5%, the benchmark S&P 500 lost 2.1% and the Russell 2000 snapped a five-day winning streak on Wednesday.
Russell futures edged 0.1% higher.
Signaling investor unease, the VIX - Wall Street's "fear gauge" - was trading at its highest since early May.
Investors will also await comments from U.S. Federal Reserve officials John Williams and Raphael Bostic for hints on the monetary policy path later in the day.
Markets have broadly priced in a 25-basis-point interest-rate cut from the Fed's September meeting and still expect two cuts by the year-end according to LSEG data.
At 8:42 a.m. ET, Dow e-minis were down 78 points, or 0.19%, S&P 500 e-minis were up 5.75 points, or 0.1%, and Nasdaq 100 e-minis were up 29 points, or 0.15%.
Meanwhile, cybersecurity shares rose, with Palo Alto Networks jumping 3.4% and SentinelOne up 10.2% after the global disruption.
Netflix rose 1.1%, reversing earlier losses after the streaming giant beat expectations for subscriber gains even as it cautioned that third-quarter subscriber additions would be lower than a year earlier.
Intuitive Surgical climbed 5% after second-quarter results beat estimates, while Eli Lilly jumped 2.5% after its weight-loss drug tirzepatide was approved in China.
0ilfield services provider SLB and insurer Travelers Companies both rose 2% after reporting strong profit for the second quarter. - Reuters
