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Wall Street Today

The S&P 500 Index (.SPX.US) bounced back from its largest weekly decline since April, while the Nasdaq Composite Index (.IXIC.US) also rebounded, driven by gains in NVIDIA (NVDA.US), Tesla (TSLA.US), and other top-performing companies. NVIDIA, a dominant player in the semiconductor market for chips used in artificial intelligence applications, saw its shares rise by 4.8% on Monday, recovering some of the losses from the previous week. Analyst Harsh Kumar from Piper Sandler raised his price target for NVIDIA, expressing optimism about the company's quarterly revenue surpassing analysts' expectations once again.

On Monday, the S&P 500 rose by 1.1% to close at 5,564.41, while the Nasdaq climbed 1.6% to 18,007.568. The Dow Jones Industrial Average (.DJI.US) also saw an increase of 0.3%, closing at 40,414.44.

Big tech companies are currently boosting the stock market. Investors are considering the potential impact of a Trump Trade and what a Kamala Harris Trade might look like, following President Joe Biden's decision to endorse his vice president for the upcoming November elections.

There wasn't any new economic data released on Monday, so the market continued to anticipate a 25 basis point cut in the September meeting of the Federal Reserve. According to the CME FedWatch tool, traders are now pricing in a 92% chance that the key interest rate will be between 5% and 5.25% in the September meeting, up from 59.5% a month ago.

Treasury yields rose to their highest level in almost two weeks on Monday as investors assess whether the change in Democratic presidential candidate from Biden to Harris would impact investor sentiment.

Later this week, the June personal consumption expenditures (PCE) price index could give investors a better idea of the U.S. rate path. Another indicator investors are keeping an eye on is the auction of $69 billion in two-year notes, which could indicate the appetite for U.S. debt and its increasing supply.

In the oil market, West Texas Intermediate crude futures dropped to their lowest point since mid-June due to concerns over global demand for oil. The outcome of the U.S. presidential race could also impact the industry, with Republicans advocating for the continued exploration and development of oil rigs while Democrats continue to support the use of renewable energy.

MOVERS

NVIDIA's revenue for its fiscal first quarter ending this month could exceed the average estimate of analysts by more than $2 billion. MarketWatch reported, quoting Kumar, that the increase is due to a rebound in networking supply. Kumar raised his price target for NVIDIA's stock to $140 from $120, indicating an upside potential of more than 10% from its current level. 

 The stock of NVIDIA, which is the third-largest company by market capitalization behind Apple and Microsoft, rallied 4.8% to close at $123.54. This helped drive the broader stock market rally and contributed to the advance in the PHLX Semiconductor Index.

$Tesla(TSLA.US)$ shares rose ahead of earnings results. Tesla is expected to report second-quarter earnings of about 48 cents a share on revenue of $24.7 billion, according to the average estimate of analysts polled by Capital IQ.

$AMC Entertainment(AMC.US)$ rallied Monday after the company said it's refinancing its $1.6 billion debt to extend the maturity.

$CrowdStrike(CRWD.US)$ fell another 13%, extending Friday's slump that was fueled by a buggy software update that triggered a global outage.

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That's all for the overview of the US market.

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What’s next for CrowdStrike? The tremors …

Let’s go to the next section. 👇️ 

The global outage from CrowdStrike is causing ongoing effects. What happens next?

Last Friday, a faulty software update released by the cybersecurity company CrowdStrike (CRWD.US) caused widespread PC crashes globally, resulting in a large number of users experiencing the "blue screen of death." This led to a cascade of failures and sustained impacts in various industries such as aviation, banking, healthcare, retail, ports, enterprises, and governments. Microsoft (MSFT.US) estimated that approximately 8.5 million Windows devices worldwide were affected by this global IT outage.

Although CrowdStrike's CEO, George Kurtz, announced that the issue had been identified, isolated, and repair measures had been deployed, experts predict that the recovery process will be lengthy. As of Sunday, FlightAware.com reported that about 1,700 flights within, into, or out of the U.S. were canceled, and over 9,000 flights were delayed.

Following the chaos caused by CrowdStrike, the company's stock price plummeted by 11%, marking its worst performance in nearly two years. Meanwhile, Microsoft's stock price experienced a slight decline of 0.7%. In contrast, some other cybersecurity stocks saw varying degrees of increase, with SentinelOne (S.US) increasing by 7.85% and Palo Alto Networks (PANW.US) up by 2.16%.

Once a favorite stock on Wall Street, CrowdStrike is facing near-term pressure on its stock price due to multiple factors. The company, with the highest market share in the endpoint protection market at 23.89%, reported record-breaking performance in the first quarter of the 2025 fiscal year ending on April 30, 2024. This included achievements such as net new annual recurring revenue (ARR) of $212 million, growing 22% year over year, and ending ARR growing 33% year over year to reach $3.65 billion. The company also delivered a record operating cash flow of $383 million and record free cash flow of $322 million. In June, the stock was added to the benchmark S&P 500 index, demonstrating the company's industry leadership and recognition in the capital market. Before the recent outage, the stock price had risen by over 30% this year, outperforming its peers. According to Moomoo data, 94% of analysts rate the stock as a buy, which is higher than Palo Alto Networks' 88%.

As the outage occurred in the last two weeks of the second fiscal quarter of the company and existing customers of CrowdStrike may seek compensation for losses incurred due to the interruption, analysts predict that this incident may have an impact on the business operations of CrowdStrike, including setbacks in order acquisition and potential compensation. Concerns about damage to corporate reputation may also put pressure on CrowdStrike for a period of time.

Shortly after the incident, Musk stated that he removed CrowdStrike from the systems following the outage. Joseph Gallo from Jefferies also warned that the CrowdStrike incident could greatly restrict the potential upward momentum of their F2Q, as new clients are waiting for assurance that the situation has been resolved. This implies that in the near future, the company's business operations may encounter challenges due to existing clients' disappointment and potential new clients' hesitance.

CrowdStrike's recent outage has raised concerns among analysts about the company's reputation and its impact on investor sentiment and business activities. Some analysts had already downgraded their rating or target price for CrowdStrike in July due to overvaluation and slowing demand prospects. However, some bullish investors see this as a buying opportunity.

 Analysts believe that the outage is unlikely to significantly impact Microsoft's business, and it may create opportunities for other cybersecurity stocks to gain new customers and expand their market share, particularly for companies like SentinelOne and Palo Alto Networks.

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However, this is not even the interesting part yet. CrowdStrike is still a hot stock for Mama Cathie 👇️ 

Cathie Wood has been buying CrowdStrike for two consecutive days.

On Monday, Cathie Wood's Ark Investment Management continued to buy stocks of the cybersecurity company CrowdStrike, which had fallen for two consecutive days due to a massive outage, resulting in a cumulative decline of 23%. Two of Ark's funds, ARKF and ARKW, purchased a total of 20,219 shares of CrowdStrike's stocks that day. Based on the closing price of $263.91 that day, the investment is worth about $5.34 million. Additionally, after the outage on the previous Friday, two Ark ETFs purchased 38,595 shares of CrowdStrike's stocks, worth approximately $13.24 million. Furthermore, on Monday, Ark's ARKW fund sold 14,859 shares of Tesla stock, valued at approximately $3.74 million based on the closing price of $251.51 that day.

That’s it for this episode!

Is this a buying opportunity or time to run away for good? Share your thoughts in the comment section below.

If you missed our CrowdStrike episode, go ahead and check it out!

Remember: Investing is a journey, not a destination. It's about making informed decisions, managing risk, and staying committed to your long-term goals. So, take the time to research, experiment, and find the perfect recipe for your balanced portfolio.

What do you think of Cathie Woods's strategy here? Smart or Dumb? Share your thoughts in the comment section below.

If you want to learn and strengthen your investment portfolio, we have 9 steps to help you avoid an investment meltdown. Check out the 9-part series here. 👇️ 

Cheers to wealth, wisdom, and a dash of madness!

The Investing Wise Academy Team

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Please consult with a financial advisor before making any investment decisions.

P.S. Don't forget to share this newsletter with your friends and colleagues who are also interested in investing in the future of finance!

Sources: Moomoo news

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