News of the day for July 22, 2024
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Ahead of a heavy earnings week, investors are focused on news that U.S. President Joe Biden has dropped out of the 2024 presidential race and endorsed Vice President Kamala Harris to be the Democratic Party’s nominee; Delta Air Lines (DAL) continues to cancel flights as the carrier keeps struggling to restore services after Friday’s major technology outage; Nvidia (NVDA) shares are rising in premarket trading after investors scaled back their holding of the year’s top artificial intelligence (AI) chipmaker last week; CrowdStrike (CRWD) shares are falling, extending their declines from Friday, after the cybersecurity firm’s software update caused the global IT outage; and China’s central bank cut a short-term interest rate. U.S. stock futures are rising after major indexes finished sharply lower Friday. Here’s what investors need to know today.
1. Biden Leaves 2024 Presidential Race, Endorses Harris
President Joe Biden dropped out of the 2024 presidential race on Sunday, endorsing Vice President Kamala Harris to be the Democratic Party’s nominee. Some Democrats and donors had publicly and privately pushed for Biden to end his campaign after a worrisome debate performance. A new candidate will change how voters evaluate the race, which has so far mainly focused on economic issues. Former President Donald Trump accepted the Republican Party’s nomination at its convention last week.
2. Delta Continues to Cancel Flights After IT Outage
Delta Air Lines (DAL) continues to feel the effects of Friday’s major technology outage—even as its rivals restore their services. On Sunday, Delta canceled 1,380 flights, 36% of its schedule, and delayed 1,614, or 42%, according to FlightAware data. As of 7:30 a.m. ET Monday, Delta had already canceled 626 flights, or 17% of its schedule, whereas rivals United Airlines (UAL) had canceled just 14 flights (0%) and American Airlines (AAL) 36 flights (1%). Delta Chief Executive Officer (CEO) Ed Bastian apologized and offered impacted passengers travel waivers and Delta SkyMiles.
3. Nvidia Gains After Slumping Last Week
Nvidia (NVDA) shares are rising 2% in premarket trading after slumping nearly 9% last week as investors scaled back bets in some of this year’s top performing artificial intelligence (AI) chipmakers over mounting concerns about tougher trade restrictions and geopolitical risks. Still, analysts have mostly remained bullish on the stock and AI in general, with Wedbush and Jefferies analysts dismissing recent political rhetoric as “noise” in the chip companies’ AI story and Bank of America analysts saying the recent volatility could present an “enhanced opportunity” to buy shares of companies like Nvidia.
4. Outage Culprit CrowdStrike Extends Losses; Cybersecurity Rivals Keep Gaining
CrowdStrike (CRWD) shares are falling about 4% in premarket trading, extending declines of 11% Friday after an update to the cybersecurity firm’s software caused an outage in Microsoft’s (MSFT) cloud services and disrupted businesses worldwide. Meanwhile, the shares of CrowdStrike competitors Palo Alto Networks (PANW) and SentinelOne (S), which rose Friday in the wake of the outage, continued their gains in premarket trading. SentinelOne shares are up about 4% and Palo Alto Networks 1%.
5. China Cuts Interest Rates, Seeking to Boost Economy
China cut its benchmark lending rate, in a move aimed at boosting an economy that continues to suffer a sharp slowdown from a prolonged real estate slump, tepid consumer spending, and trade tensions. The People’s Bank of China cut a short-term policy rate, and Chinese banks followed by cutting their benchmark five-year lending rate for mortgages by 10 basis points, as well as a one-year loan prime rate. The cuts come after last week’s twice-a-decade meeting to discuss reforms by President Xi Jinping and the Communist Party’s top officials failed to result in big measures to boost the economy. China’s gross domestic product (GDP) rose a weaker-than-forecast 4.7% year-over-year in the second quarter.
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