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U.S. stock index futures fell on Friday, as traders shifted out of expensive megacap technology stocks, while assessing the impact of a worldwide tech outage that hit businesses across sectors.
Major U.S. airlines ordered ground stops citing communications issues, while firms including some financial services and banks reported system outages that disrupted their operations.
Microsoft fell 2.7% in premarket trading after the cloud disruption.
CrowdStrike Holdings slumped 19% after the Australian government said some outages in the country appeared to be linked to an issue at the company.
The disruption comes after a grueling two 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.
Other megacaps such as Nvidia and Apple fell 0.9% and 0.3%, respectively. Chip stocks were mixed in premarket trading, with the U.S. listing of Taiwan Semiconductor Manufacturing down 1.8%, while Broadcom rose 0.10%.
London Stock Exchange Group's Workspace news and data platform was also hit by the outage, affecting user access worldwide and leading to disruptions across financial markets, while Euronext said some North American stocks-based indices were being broadcast incorrectly.
"There is chatter that cybersecurity firm Crowdstrike ran an update which didn’t work on Microsoft’s operating system and that caused systems to fall over. Given we don’t know the full details, it’s too early for investors to work out the financial or reputational impact to these businesses," said Dan Coatsworth, investment analyst at AJ Bell.
Over the past two sessions, the Nasdaq Composite has fallen 3.5%, the benchmark S&P 500 lost 2.1% and the Russell 2000 snapped a five-day winning streak on Wednesday.
Signaling investor unease, the VIX, Wall Street's "fear gauge", was trading above 16 points - its highest since late April.
Corporate earnings are also on deck. Reports from American Express, The Travelers Companies and Halliburton are expected before markets open on Friday.
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 by the Fed's September meeting and still expect two cuts by the year-end according to LSEG data.
At 5:26 a.m. ET, Dow e-minis were down 128 points, or 0.31%, S&P 500 e-minis were down 13.5 points, or 0.24%, and Nasdaq 100 e-minis were down 73.25 points, or 0.37%.
Cybersecurity companies including Palo Alto Networks , Fortinet and Zscaler rose between 1.4% and 6.3% after the global disruption.
Among single movers, Netflix fell 1.6% after the streaming giant cautioned that third-quarter subscriber gains would be lower than a year earlier and forecast Q3 revenue below estimates.
(Reporting by Lisa Mattackal in Bengaluru; Editing by Pooja Desai)