Stocks retreated Friday, as Wall Street wrapped up the week defined by a rotation out of this year's megacap winners in favor of smaller names.

The S&P 500 dropped 0.71%, closing at 5,505.00. Nasdaq Composite slid 0.81% to end at 17,726.94. The Dow Jones Industrial Average fell 377.49 points, or 0.93%, to 40,287.53.

Friday's moves marked another day of declines across the board, with the Russell 2000 down 0.63%. But a shift toward names viewed as bigger beneficiaries of interest rate cuts from the Federal Reserve, like small caps, still appears to be theme of the week.

The S&P 500 and Nasdaq slipped 1.97% and 3.65%, respectively, marking their biggest weekly losses since April. The tech-heavy Nasdaq also snapped a six-week win streak. On the other hand, the Dow advanced 0.72%, while the small cap-focused Russell 2000 climbed 1.68%.

"The stock market is experiencing a long overdue rotation," said Glen Smith, chief investment officer at GDS Wealth Management. "Investors are taking money out of big tech stocks which have performed so well and moving that money into other areas of the market."

That divergence has encouraged some Wall Street pros, who had worried that the market rally was becoming too dependent on a handful of massive tech stocks. Meanwhile, rising optimism around forthcoming interest rate decreases from the Fed have bolstered smaller and more cyclically oriented names.

A shift away from megacap artificial intelligence beneficiaries can explain the Nasdaq's underperformance this week. Similarly, the information technology sector led the broad S&P 500 lower with a 5.1% drop.

"The headline is 'these are down' with some of the momentum stocks getting hit," said Chris Verrone, head of technical and macro research at Strategas, on CNBC's "Squawk Box." But, "the breadth under the surface these last two weeks has been absolutely spectacular."

CrowdStrike tumbled 11.1% following a major information technology outage that impacted business around the world. The New York Stock Exchange and Nasdaq both said trading did not appear affected.

Stocks finish lower

Stocks concluded Friday's session in the red.

The Dow lost more than 370 points, or 0.9%. The S&P 500 and Nasdaq Composite shed about 0.7% and 0.8%, respectively.

The Dow was the only of the three major indexes to register gains this week, adding 0.7%. The S&P 500 and Nasdaq dropped about 2% and 3.7%, respectively.

— Alex Harring

Bank of America says 'successful' Prime Day supports Amazon's 3Q outlook

Bank of America analyst Justin Post said Amazon made fewer disclosures in its Prime Day press release on Thursday, including the use 15% fewer words in the statement. That said, Post expects a "successful" Prime Day supports the outlook for Amazon's third quarter.

The analyst said he is "constructive" on Amazon's second-quarter e-commerce sales, but expects a profit beat will be needed during the quarter to meet investor expectations. Shares have declined more than 6% this week.

One of the missing details from this year's release was color around how much customers saved during the two-day sales event, Post said. This year's release said it was "billions," but last year Amazon claimed its shoppers saved more than $2.5 billion, he said.

CNBC Pro reported that it is shaping up to be a very promotional back-to-school shopping season. Adobe Analytics, which looked at Amazon's Prime Day and competing events on Tuesday and Wednesday, said online discounts peaked at 23% off for electronics, which was deeper than the average 14% markdown in 2023. Still, that observation doesn't include sales that Walmart and Target hosted the prior week or and event Wayfair has coming up.

—Christina Cheddar Berk

Strategas remains bullish on market, economy

Strategas is still positive on the economy and the market as inflation improves and earnings broaden out.

While there have been some sights of weakness in economic growth, there has been little follow through in the market, said Nicholas Bohnsack, Strategas co-founder and president and chief operating officer of Strategas Securities.

Plus, politics has finally reached its high season and it will be a "quick sprint to Election Day when the smoke clears," Bohnsack wrote in a note Thursday.

The firm's focus is on the fundamentals and it remains modestly overweight equities, with a preference for international markets.

"From a tactical perspective July and August would appear a good opportunity to take stock of the current fundamental environment, resist the temptation to (over)react to every ebb-and-flow of the political discourse and, ultimately, focus-in on the areas of thematic momentum that are likely to carry through year-end and into 2025," Bohnsack said.

— Michelle Fox

A Biden drop out could 'pause' the 'Trump trade,' analyst says

President Joe Biden is under increasing pressure to drop out of the the 2024 election, with polls showing him trailing Donald Trump and fundraising money slowing. NBC News reported Friday that members of the Biden family were discussing a potential exit, citing two sources familiar with the talks.

If Biden does drop out, that could case throw a wrench in the so-called "Trump trade," at least temporarily.

We could see a stalling out of the recent 'Trump trade' as the market reassesses the race, but we do not see a broader market reaction," Raymond James Washington policy analyst Ed Mills said in a note to clients on Thursday evening.

— Jesse Pound

Megacap tech stocks drag Dow down this week

Mega-cap technology stocks continued to drag the Dow lower this week, with Magnificent Seven names making up some of the index's biggest losers.

Amazon, Intel, Microsoft, Apple and Salesforce were five out of the Dow's six biggest losers. Amazon is on pace for a 6% drop, while Intel and Microsoft have slipped around 4%. Apple and Salesforce could end the week with a 3% loss.

Sixteen of the Dow's 30 constituents are poised to end this week with a gain. UnitedHealth Group easily led the pack, having notched a nearly 11% advancement this week. Caterpillar, Chevron, Johnson & Johnson and JPMorgan Chase are all up around 3%.

— Lisa Kailai Han

Reduce dollar exposure, says UBS

With the U.S. dollar index up nearly 3% in 2024, UBS says investors should start selling dollar rallies.

The dollar is currently hovering at levels last seen in the early 2000s and mid-1980s in real trade-weighted terms, according to strategist Sagar Khandelwal. He believes if depreciation pressures or fiscal deficit fears rise, the dollar could weaken in the long term.

"We believe investors should use periods of near-term dollar strength to reduce dollar exposure or to engage in volatility selling strategies to generate income, ahead of Fed rate cuts likely starting in September," Khandelwal said.

To be sure, a Republican sweep of the White House and Congress may result in a short-term rise of the dollar. Nonetheless, with the dollar already 15% higher from where it was after President Donald Trump's first term, Khandelwal says the effect would likely be less than during Trump's first term.

— Hakyung Kim

Bitcoin hits highest level in a month

Bitcoin moved 4.5% higher on Friday, hitting $66,496.40. This marks its highest level since June 18, when it reached $66,717.03.

The cryptocurrency is also up nearly 15% week to date, putting it on pace for its best week since March 1, when it gained 22.8%. If it closes higher Friday, it would see back-to-back weekly gains after four straight weeks of losses.

— Sean Conlon, Nick Wells

Stocks making the biggest moves midday

Here are some of the stocks on the move midday:

• CrowdStrike – The stock fell more than 10% after an update by the cybersecurity firm caused a major IT outage that affected airlines, hospitals, financial services firms and other businesses. Shares of Microsoft were also marginally lower following the news that many Microsoft users around the world were hit with an error screen called the "blue screen of death." The outage also sent shares of CrowdStrike rivals SentinelOne and Palo Alto Networks higher, with the stocks gaining around 9% and 2%, respectively.
• Plug Power – Shares of the green energy company plummeted 13%, on pace for its fourth-straight losing year. Late Thursday, the company announced that it plans to sell $200 million of stock, which now trades around $2.50 per share.
• Comerica – Shares tumbled nearly 11% after the bank posted second-quarter financial results that reflected a decrease in net interest income from the prior-year quarter. Comerica's net interest income came in at $533 million, higher than the $530.5 million expected from analysts polled by FactSet, but still lower than a year ago. Comerica's CEO, Curtis Farmer, said high rates are pressuring the bank's deposits.

Read the full list here.

— Sean Conlon

Information technology stocks drag S&P 500 down this week

Information technology shares have led the S&P 500 lower this week.

The broad index has fallen more than 1.5% as of midday trading on Friday. A sizable chunk of that decrease can be tied a drop of more than 4% in information technology, the worst performing of the 11 sectors that comprise the S&P 500.

Advanced Micro Devices led the sector lower with a drop of more than 16% this week. CrowdStrike, the company whose tech update caused a worldwide IT outage, fell nearly 16%. Both were tracking for their worst weekly performances in more than a year.

Despite the decline, five of the 11 sectors were still tracking for gains on the week. Energy and financials were the biggest winners, adding more than 2% and 1%, respectively.

— Alex Harring

CrowdStrike headed for worst week since November 2022

CrowdStrike's major IT outage, which has affected businesses globally, is leading the stock to its worst weekly performance since November 2022.

Shares were 9% lower Friday, pulling the stock down by nearly 16% week to date.

CrowdStrike shares are still higher by 22.5% in 2024.

— Hakyung Kim

Nvidia on pace for worst week in 3 months

Shares of Nvidia moved lower on Friday, putting the stock on pace for its worst week since April 19 when the stock closed out the week nearly 14% lower. 

This comes amid a rotation out of megacap technology stocks into more sensitive stocks like small-caps. Those names have been on a tear this week, with the Russell 2000 index hitting its highest level since January 2022 on Tuesday.

The index was up more than 2% for the week during morning trading.

— Sean Conlon

Gold heads for worst day in over a month

Gold prices were down more than 2% on Friday, putting the precious metal on track for its biggest one-day loss since June 7 — when it shed 2.8%. The move comes after gold hit a record high earlier this week.

— Fred Imbert

SunPower stock collapses below $1 as company halts new leases, installations and shipments

SunPower stock has cratered 70% this week after the company halted new leases, installations or product shipments.

The residential solar installer told dealers that it recognizes "the gravity" of the decision and is looking for alternative providers to transfer sold projects, according to a July 17 letter obtained by the firm Roth MKM.

SunPower stock has lost nearly all of its value the last 12 months, with shares down 92% to trade at 80 cents on Friday. Guggenheim Securities has slashed its price target to $0 from $1 previously.

"We think this effectively marks the end for SPWR as an operating business," Guggenheim analysts Joseph Osha and Hilary Cauley told clients in a Friday note.

— Spencer Kimball

Move to small caps may be more 'disruption' than 'rotation,' asset manager says

The shift to small-cap stocks hasn't yet shown proof that it's a true rotation, according to Michael Green, chief strategist at Simplify Asset Manager.

In fact, he said traders should view this more as a "disruption" than a "rotation" based on the current facts.

"The question becomes: Does it maintain itself in any meaningful form?," Green told CNBC on Friday morning. "There's plenty of capacity for this rotation to continue. But I would argue we're not really seeing the evidence of that turn yet."

— Alex Harring

Stocks open little changed

The three major indexes were little changed as Friday's trading session kicked off.

The Dow lost around 78 points, or 0.2%, shortly after 9:30 a.m. ET. The Nasdaq Composite also shed 0.2%, while the S&P 500 was near flat.

The S&P 500 and Nasdaq are tracking to end the week down by more than 1% and 3%, respectively. On the other hand, the Dow has climbed more than 1%.

— Alex Harring

See the stocks moving in the premarket

Here are some of the names making moves before the bell:

• American Express — The financial company shed nearly 2% after reporting a second-quarter revenue miss. However, its adjusted earnings per share came in above estimates.
• Comerica — The stock tumbled about 10% after the company released its second-quarter financial results. Comerica's net interest income came in above expectations, but lower than a year ago. The bank said high rates are pressuring deposits and that it saw weaker loan volume.
• SLB — The oilfield services giant gained 2% after reporting second-quarter adjusted earnings per share of 85 cents, above the 83 cents expected from analysts polled by LSEG. Revenue also topped expectations.

To see more stocks making premarket moves, read the full story here.

— Michelle Fox

American Express retreats on weaker-than-expected revenue

American Express slipped more than 2% after revenue came in under Wall Street's expectations.

The financial services company posted $16.33 billion in revenue for its second quarter, less than the consensus forecast of $16.59 from analysts polled by LSEG. On the other hand, American Express saw $3.49 in earnings per share, excluding items, which exceeded the figure of $3.24 per share anticipated by analysts.

Shares have jumped around 33% in 2024.

— Alex Harring

NYSE, Nasdaq say trading as expected

The New York Stock Exchange and Nasdaq said they are operating normally and should open as expected. That comes after a major information technology outage has impacted businesses worldwide.

— Alex Harring

CrowdStrike drops following outages

CrowdStrike tanked Friday before the bell after the cybersecurity company said a product update caused a major outage that impacted information technology systems around the world.

Shares tumbled more than 12% before the bell. Microsoft, which reported issues tied to its Azure and Microsoft 365 products, slid more than 1%.

Other cybersecurity names rose as investors considered whether companies would switch to competitors following this debacle. Most notably, Palo Alto and Fortinet advanced more than 2% and 1%, respectively.

Follow live updates from CNBC on the wide-ranging impacts from this outage.

— Alex Harring

Why Netflix's weak revenue guidance might not be too concerning

Netflix's third-quarter revenue guidance is a bit light at $9.73 billion vs. the $9.82 billion expected by Wall Street.

That might not be too problematic for investors though. Lately, it has not been unusual for the streaming company to give a revenue forecast that initially undershoots analyst estimates. In its previous 4 quarterly reports, Netflix gave a forecast that was below the consensus estimate at the time – only to post revenues that were either in line or a beat three months later. Additionally, in each of those earnings reports, Netflix's actual revenue figure wound up being higher than the company's initial guidance.

This comes as Netflix is pushing its revenue metrics more – and by next year, it'll no longer provide subscriber figures as the company leans more on its advertising model. Another sign that its ad-supported plans are becoming increasingly important: in this afternoon's report, Netflix said it will begin phasing out its ad-free basic plan in the U.S. and France after doing so already in the U.K. and Canada.

— Robert Hum

Dow, small caps head for winning week

Here's where the top indexes stand with one session left in the week:

• The S&P 500 is down 1.26% week to date, on pace for its worst week since April.
• The Dow is up 1.66% week to date, on pace for its third positive week in a row.
• The Nasdaq Composite is down 2.87% week to date, on pace to break a six-week winning streak.
• The Russell 2000 is up 2.33% week to date, on pace for its fourth positive week in five.

— Jesse Pound, Christopher Hayes

Small-cap rotation could last a few more weeks, Saira Malik says

The rotation into small-cap stocks may not be done just yet, according to Nuveen's Saira Malik.

"History tells you, on average, this kind of rotation lasts about four weeks," the firm's chief investment officer told CNBC's "Closing Bell." "What could derail it is tech earnings in a couple of weeks, but the bar is high."

Malik also said that small caps' outperformance could be discontinued in September around the time the Federal Reserve potentially cuts interest rates.

While the Russell 2000 moved nearly 2% lower in Thursday's session, it's up about 8.6% in the last one month, more than 8 times the gains of the S&P 500 in that period.

On Tuesday, the index saw its fifth straight day of gains. This marked the fifth time since 1979 that it had a five-day streak of gains of at least 1%, per Bespoke Investment Group.

— Sean Conlon

Health-care sector posts worst day since September 2022

The health-care sector of the S&P 500 slid 2.29% on Thursday for its worst session since September 2022.

Health care, normally deemed a defensive play for investors, was also the worst performer among the 11 sectors of the S&P 500. Energy was the only positive sector amid Thursday's sharp sell-off.

Notable losers in the health-care sector include Eli Lilly, which slid about 6.3%, and Bio-Rad Technologies, which lost 5.8%. Idexx Laboratories tumbled 5.2%.

—Darla Mercado, Chris Hayes

Netflix, Intuitive Surgical headline after hours movers

Earnings reports were driving stock moves in extended trading Thursday.

Shares of Netflix were volatile after the streaming video giant's second-quarter report topped expectations but included underwhelming revenue guidance. Meanwhile, shares of Intuitive Surgical rose more than 6% after the biotech company beat estimates on the top and bottom lines.

Check out more about after hours movers here.

— Jesse Pound

Futures open little changed

Stock futures were mostly unchanged at 6 p.m. in New York. Futures for the Nasdaq 100 were up more than 0.2%, while futures for the Dow and S&P 500 were closer to flat.

— Jesse Pound