Microsoft and CrowdStrike stocks plunge after global IT failure
After the cybersecurity incident, shares of Microsoft and CrowdStrike experienced declines. However, the more significant sell-off concerns only the latter company. Other companies are also losing value, which experts attribute to unofficial reports about Joe Biden possibly withdrawing from the election race.
1:03 PM EDT, July 19, 2024
The failure of global IT systems, which affected many sectors of the economy, including airlines, triggered a reaction from the stock market. After trading began in New York at 9:30 AM ET, it was clear that the incident had caused stock drops for some tech giants on Wall Street. Market experts, however, say the reasons for the declines are complex.
According to MarketWatch, American stock exchanges started the day with declines as investors also reacted to reports that President Joe Biden might soon withdraw from the re-election race.
Microsoft and CrowdStrike are losing. Stocks down
Particularly harmed were the shares of CrowdStrike, whose cybersecurity product failed early in the morning. The shares lost as much as 11 percent of their value. Microsoft, affected by issues with its Azure services and Microsoft 365 package, recorded a nearly 4 percent drop.
Before the market opened—during what is known as pre-market trading—the situation looked even worse, with CrowdStrike shares recording an 18.67 percent drop. Investors' concerns seem justified, as a security update provided by CrowdStrike caused the global failure.
Institutions worldwide, including major banks, media, and airlines, felt the effects of the failure. There were grounded planes and halted broadcasts in television studios. The London Stock Exchange reported problems with its RNS information service.
CrowdStrike takes responsibility
George Kurtz, CEO and president of CrowdStrike, addressed the situation on platform X (formerly known as Twitter). He emphasized that the company is actively resolving the problem, which affected Windows but not Mac or Linux systems. Kurtz assured us that this was not a security incident or cyberattack and that the issue had been identified and resolved.
Microsoft confirmed it is aware of the problem affecting Windows devices caused by a software update from an external provider. A company spokesperson assured us that a solution is close.
European stock markets also affected
The failure involved CrowdStrike's Falcon Sensor product, which uses cloud technology to prevent cybersecurity breaches. On July 15, CrowdStrike announced the introduction of CrowdStrike Falcon Complete Next-Gen MDR, a solution to prevent breaches with unprecedented speed and precision across the enterprise scope.
Market experts emphasize that the server downtime has seriously damaged Microsoft's reputation. This incident has highlighted how dependent the global economy is on a single company's technology and the risks associated with such concentration.
Microsoft's server failure caused a domino effect on global financial markets. European stock indexes recorded declines, including FTSE, CAC, and DAX. The negative trend was also evident on Asian stock exchanges—the Hang Seng and Taiwanese indexes closed in the red.
