Wall Street opened the morning with news that came as no surprise: President Joe Biden announced his withdrawal from the presidential race. The market reacted mutedly to the news, with Wall Street futures slightly higher, bond yields slightly lower, and the dollar virtually unchanged.

Biden has thrown his support behind his Vice President Kamala Harris, giving her a lead position for the nomination at the Democratic National Convention, which runs from August 19 to 22. It is also possible that the party may consider a virtual nomination before the convention.

According to online betting site PredictIT, the price for Donald Trump to win has fallen 5 cents to 59 cents, while the price for Harris has increased 13 cents to 40 cents. California Governor Gavin Newsom, another possible Democratic candidate, is still behind at 3 cents.

Goldman Sachs said in a report that it does not expect significant changes in the Democrats' fiscal and trade policies if Harris wins.

Back to Friday's events.

U.S. stocks continued to decline on Friday as chaos continued to rage around a global software outage, adding further uncertainty to an already volatile market.

Massive technology disruptions have hit industries including aviation, banking and healthcare after a software bug at Crowdstrike (CRWD.O) disrupted Microsoft's (MSFT.O) Windows operating system.

While the vulnerability has been identified and fixed, some services continue to experience technical difficulties.

Crowdstrike shares fell 11.1%, while rival cybersecurity companies Palo Alto Networks (PANW.O) and SentinelOne (S.N) rose 2.2% and 7.8%, respectively.

All three major U.S. stock indexes ended in the red, with the Dow Jones Industrial Average the hardest hit.

On a weekly basis, the Nasdaq and S&P 500 posted their worst performances since April, while the Dow, which had hit records earlier in the week, rose Friday to Friday.

"This tech disruption adds an element of uncertainty and weighs on the Nasdaq as a whole," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "But overall it won't have a huge impact. Some buying will be delayed. Plus, it's a summer Friday, and the downtime is making investors take a wait-and-see attitude."

The CBOE Volatility Index (.VIX), often seen as a gauge of investor anxiety, hit its highest since late April. Small-cap stocks in the Russell 2000 (.RUT), which had previously benefited from a decline in interest in Big Tech, ended the day slightly lower.

Nvidia (NVDA.O) was the biggest decliner among chip stocks. The Philadelphia SE Semiconductor Index (.SOX) was among the laggards, down 3.1%.

In addition, New York Federal Reserve President John Williams reiterated that the central bank remains committed to reducing inflation to its 2% target.

According to CME's FedWatch tool, the chances that the Fed will begin cutting rates after its September meeting are estimated at 93.5%.

The Dow Jones Industrial Average (.DJI) fell 377.49 points, or 0.93%, to 40,287.53. The S&P 500 (.SPX) fell 39.59 points, or 0.71%, to 5,505. The Nasdaq Composite Index (.IXIC) lost 144.28 points, or 0.81%, to 17,726.94.

Among the 11 major sectors in the S&P 500, energy (.SPNY) was the biggest decliner, while health care (.SPXBK) and utilities (.SPLRCU) were up.

The second-quarter earnings season ended in the first full week of August, with 70 S&P 500 companies reporting results. Of those, 83% beat analysts' estimates, according to LSEG.

Analysts now forecast that the S&P 500 will post 11.1% annualized earnings growth, up from the previous estimate of 10.6% on July 1.

Next week brings big earnings from Tesla (TSLA.O), Alphabet (GOOGL.O), IBM (IBM.N), General Motors (GM.N), Ford (F.N) and many more.

"Earnings season is just getting started, but the results are already impressive," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "With a lot of big companies reporting next week, we want to hear how strong the consumer is and what the outlook for future economic growth is."

Eli Lilly (LLY.N) shares rose 1.0% after China approved its weight-loss drug tirzepatide. Meanwhile, Intuitive Surgical (ISRG.O) shares rose 9.4% on better-than-expected second-quarter results.

Travelers (TRV.N) shares fell 7.8% on weaker-than-expected net premium growth.

Netflix (NFLX.O) fell 1.5% in choppy trading after warning that third-quarter subscriber growth would be weaker than last year.

Oilfield services company SLB (SLB.N) rose 1.9% on strong second-quarter earnings.

Declining stocks outnumbered advancing ones on the NYSE by a 2.11-to-1 ratio; on the Nasdaq, decliners outnumbered decliners by a 1.91-to-1 ratio.

The S&P 500 posted 27 new 52-week highs and four new lows, while the Nasdaq Composite posted 50 new highs and 99 new lows. Volume on U.S. exchanges totaled 10.54 billion shares, below the 11.72 billion average over the past 20 trading days.

Last week saw a significant investor shift away from big tech companies to smaller companies and banks, resulting in a loss of about $900 billion in the S&P 500 tech sector.

The pullback was not surprising, given that giants like Alphabet (GOOGL.O), Tesla (TSLA.O), Amazon.com (AMZN.O), Microsoft (MSFT.O), Meta Platforms (META.O), Apple (AAPL.O) and Nvidia (NVDA.O) have accounted for about 60% of the S&P 500's gains this year.

That situation has set the stage for strong second-quarter results, including from mega-caps like Tesla and Google parent Alphabet.

Expectations are high, with full-year earnings expected to rise 17% in tech and 22% in communications.