Biden paused, endorsing Harris

This report is from today’s CNBC Daily Open, our international market newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.

Biden is down
President Joe Biden on Sunday dropped out of the presidential race against Donald Trump and endorsed Vice President Kamala Harris as the Democratic Party nominee, bowing to pressure from party members to drop out. Harris said in a statement, “I am honored to have the endorsement of the President and the intention to obtain and win this nomination.” You can read more about the next step. Meanwhile, Republican lawmakers are calling for Biden to resign. What does this mean for the market? CNBC’s Jesse Pound writes ‘Trump’s trade’ could stop.

CrowdStrike failed
Nearly 8.5 million devices were affected by a faulty software update from cybersecurity firm CrowdStrike, causing a global IT outage on Friday. The disruption affected services across all industries, including banking, healthcare, and airlines. Flights were shut down, and TV broadcasters went offline as businesses struggled to cope with lingering problems. Delta Air Lines canceled 800 major flights on Sunday and offered more pay to crews as it struggles to recover. CrowdStrike shares fell 11% on Friday. You can read more about how software updates caused one of the world’s biggest IT outages. And there’s more from CNBC’s coverage of how the next IT crisis is already here.

Biggest weekly loss
The S&P 500 and Nasdaq Composite posted their biggest weekly losses since April, down nearly 2% and 3.7%, respectively. A rotation from mega-cap AI-related stocks and into cyclicals in anticipation of interest rate cuts saw the Dow Jones Industrial Average rise 0.7%, while the small-cap-focused Russell 2000 advanced 1.7%. Yields on 10-year Treasurys are higher, while US oil prices are down more than 3%.

Boeing ‘disappointed’ customers
Boeing’s 737 Max aircraft output is showing signs of improvement, the head of its new commercial unit has said, while admitting that the manufacturer has “disappointed” customers with delayed aircraft. “We have affected the business and we have not met the commitment and lived up to being the partner that they expect and they need us to be,” Stephanie Pope said before the Farnborough Airshow, outside London. However, he expressed confidence in Boeing’s path to improve production quality, and mentioned the higher output of the 737 Max aircraft to 38 per month.

Asia down, China cuts tariffs
Markets in the Asia-Pacific region largely fell as China’s central bank unexpectedly cut rates in an effort to support the economy. Mainland China’s CSI 300 fell 0.76%, while Hong Kong’s Hang Seng index rose 0.82%. Japan’s export-heavy Nikkei 225 fell 1.14%, South Korea’s Kospi fell 1.24% and Australia’s S&P/ASX 200 fell 0.76%.

(PRO) Time to bearish?
Bank of America strategist Sebastian Raedler urged investors to remain vigilant as markets hit record highs, citing economic indicators. Raedler warned of a potential stock market pullback, forecasting the S&P 500 could drop to 5,400.

Markets struggled with the new US election landscape after Biden announced on Sunday that he would end his re-election campaign against Trump. CNBC’s Jim Cramer shares his thoughts on why the “Trump trade” is stalling and uncertainty is in the driver’s seat.

It’s not just politics that creates uncertainty. Worldwide IT disruptions leave organizations and individuals in stalled operations, downtime and day-to-day work. CrowdStrike’s botched content update caused a global computer outage, causing the dreaded blue screen on countless Microsoft Windows systems. The impact was far-reaching, disrupting flights, medical procedures, and daily life from New York to New Delhi.

CrowdStrike’s stock plummeted, shedding billions in value and damaging its reputation. It instantly became a meme on social media. Even Elon Musk tweeted on X that he had deleted CrowdStrike from his computer.

“This is a black moment for CrowdStrike,” Wedbush Securities’ Dan Ives told CNBC. “The big problem is brand damage. CrowdStrike is becoming a household name but not in a good way.”

The incident also raised concerns about the vulnerability of Big Tech, with FTC Chairwoman Lina Khan highlighting the risks of concentrated market power and a “fragile system.” “Concentration of production can concentrate risk, so that one natural disaster or disruption has a cascading effect,” Khan wrote in a series of posts. Khan stopped short of announcing the official investigation, but he made connections to past actions that have probed cloud computing and frequent acquisitions in the technology sector.

While Ives expects CrowdStrike to be called to Washington for a hearing, he believes this could lead to an acquisition by Big Tech because of “some danger” from third-party updates. “This is a more positive thing for M&A between Big Tech and cyber.”

Big Tech faces the challenge of saving Wall Street’s spirit after a $900 billion tech rout. Earnings season kicks off with Alphabet and Tesla this Tuesday, providing an important test of whether big investments in AI by industry giants like Google, Microsoft, and Meta are bearing fruit. Microsoft and Apple will follow next week’s reports, further shaping investor sentiment. CNBC’s Fred Imbert has more on the big earners.

Two economic reports of note that should shed more light on the Federal Reserve’s interest rate decision. Thursday is the first reading of second-quarter GDP and Friday, the Fed’s favorite measure of inflation, the core PCE price index. You can read more here about what to expect next week.

— CNBC’s Alex Harring, Jesse Pound, Kevin Williams, Leslie Josephs, Josie Rozzelle, Kevin Breuninger, Dan Mangan, Zev Fima, Spencer Kimball and Lim Hui Jie contributed to this report.