TECH OUTAGES
Businesses and public services globally have faced significant disruptions following a flawed update of a crucial cybersecurity program by Microsoft Corp, as well as reported issues within its Azure cloud service. These technical glitches have impacted companies such as McDonald’s, United Airlines, and the New York subway system, resulting in communication breakdowns and service disruptions. The situation is exacerbated by a separate problem with the widely-used security software from CrowdStrike Holdings Inc. Moreover, according to CrowdStrike CEO George Kurtz, the issue has been addressed, however, the widespread outages underscore the vulnerabilities in the interconnected modern economy. The cascading failures have disrupted essential services and caused significant economic impacts, as evidenced by the sharp decline in the stock value of both CrowdStrike and Microsoft. This incident is deemed one of the largest IT outages in history, and reflects the critical role of security software in ensuring the stability and security of digital infrastructure on a global scale.
RESISTANCE DESPITE APPROVAL
Despite experiencing a significant rally this week, Ethereum (ETH) has been facing strong resistance, and as of 8:00 AM CST, Ether is trading below the $3,500 mark it had briefly reached. The U.S. Securities and Exchange Commission (SEC) has granted preliminary approval for two more Ethereum exchange-traded funds (ETFs), bringing the total issuers awaiting final regulatory approval to eight. Nonetheless, despite this positive news, the derivatives market for Ether has not shown much excitement. Moreover, some experts, such as those from Bitwise, are optimistic about ETH’s future, predicting a price of $5,000 by the end of 2024 due to factors like low inflation rates and a significant amount of supply locked in staking. However, despite the overall market cap of cryptocurrencies increasing by 43% this year, investors appear to be exercising caution.
AMEX’S STRONG GROWTH
American Express (AmEx) has shown resilience in the face of economic challenges, with its affluent cardholders helping to offset potential weaknesses in the broader economy. CEO Stephen Squeri highlighted the company’s focus on premium, high credit quality customers, along with its efficient expense management and strategic investments, as key drivers of its strong financial performance. This was reflected in AmEx’s second quarter results, which saw a significant increase in profit compared to the previous year. The company also raised its earnings per share forecast for 2024, signaling confidence in its future growth prospects. Moreover, despite falling slightly short of revenue expectations, AmEx remains proactive in expanding its market presence through acquisitions like the recent purchase of restaurant-booking platform Tock. Analysts believe this move could bolster AmEx’s position in the small-and-medium-enterprise market, even despite the recent slowdown in SME spending growth.
DECLINE AFTER MIXED Q2
Charles Schwab (SCHW) stock experienced a decline following the company’s earnings report and announcement of a temporary halt to its share buyback program in order to prioritize debt repayment. Although this news may have unsettled investors, management remains optimistic about boosting the net interest margin through potential interest rate cuts. The company’s second quarter results showed mixed performance, with earnings slightly surpassing expectations while revenue fell short. In addition, with nearly 1 million new users added to the platform and overall net new assets increasing, Charles Schwab continues to demonstrate growth in user engagement and assets under management. Nevertheless, it is worth noting that while analysts have a positive outlook for the stock’s future growth prospects, concerns linger regarding the company’s own forecast accuracy and external market influences, such as potential rate hikes due to political and economic factors. Moreover, as of today, SCHW is rated as a Moderate Buy by analysts on TipRanks, with an average price target of $81.23 indicating a potential upside of 30.45%.
INTERNATIONAL NEWS
European markets have experienced a decrease due to concerns about the latest European Central Bank (ECB) interest rate decision and the global IT outage linked to cybersecurity issues at CrowdStrike. By 8:00 AM CST, the pan-European Stoxx 600 index had fallen by 0.4%, with most sectors showing negative trends. Travel and leisure stocks dropped the most by 1.91%, followed closely by a 1.81% decline in mining stocks. This marks a continuation of the week’s negative trend, with the Stoxx 600 closing lower for the fourth consecutive day. Nevertheless, it is worth noting that despite the overall downward trend, healthcare stocks managed to increase slightly by 0.29%.
