The S&P500, which had been doing well for five days, had a slight drop on Friday, mainly because Intel gave a not-so-good forecast for the first quarter. Intel’s stock went down by 12%, causing concerns in the tech industry. Deutsche Bank, however, pointed out that Intel’s main business in PCs and data centers is still strong, and they expect growth in 2024. But, this stumble affected other chip stocks, with Western Digital also going down by over 3%, even though they had good quarterly results.. Explore advanced trading tools and EAs at 4xPip to elevate your trading game. For more information, contact us at [email protected]. Now, let’s delve into the dynamic landscape shaped by MicroStrategy’s Bitcoin venture and the looming SEC decision.

S&P500’s Record Run Cut Short:

The S&P500, after an impressive five-day record run, experienced a slight setback on Friday. Despite Intel’s stumble, the index managed to end the week on a positive note. By 16:00 ET, the Dow Jones Industrial Average saw a modest gain of 0.2%, while the S&P 500 slipped by 0.1%, and the Nasdaq Composite fell by 0.4%.

Intel’s Disappointing Guidance Rattles Tech Stocks:

Tech giant Intel’s disappointing first-quarter guidance played a pivotal role in the market’s fluctuations. The chipmaker’s shares tumbled by 12%, causing a ripple effect that impacted the broader tech sector. However, amidst the setback, there’s a glimmer of optimism. Deutsche Bank noted that the weakness wasn’t in Intel’s core PC and datacenter business, and the management expressed confidence in a return to growth throughout 2024.

Chip Stocks Wobble:

Adding to the wobble in chip stocks was Western Digital Corporation, despite reporting better-than-expected quarterly results and guidance. The memory chip maker’s over 3% decline further contributed to the challenges faced by the tech sector during the trading session.

Inflation Cools Ahead of Fed Decision:

Ahead of the upcoming Federal Reserve decision, the “core” personal consumption expenditures price index, the Fed’s preferred inflation gauge, showed a slowdown to a 2.9% pace in December. This decrease from 3.2% in the previous month aligns with economists’ estimates of 3%. A cooling inflation rate could be welcomed by the Fed as they approach their policy meeting scheduled for Jan. 30-31.

Earnings Season Updates:

The earnings season unfolded with T-Mobile US slightly lower as the wireless carrier missed its profit target for the fourth quarter. Despite this setback, T-Mobile remains optimistic about monthly bill-paying phone subscriber growth, relying on its expansive 5G coverage and promotional offers to attract consumers.

In contrast, American Express stock surged by 7% after beating full-year profit expectations. The credit card giant raised its loan loss provisions, anticipating a potential increase in loan defaults but still showcasing strong performance.

However, Visa faced a 1.7% decline as it offered tepid second-quarter sales guidance. The world’s largest payments processor forecasted a modest increase in net revenue, signaling a potential slowdown compared to the corresponding period in 2023.

Summary:

In summary, the S&P500’s record run faced a temporary hiccup due to Intel’s disappointing guidance, impacting the broader tech sector. Meanwhile, fluctuations in chip stocks and a cooling inflation rate added to the market’s complexities. Earnings season brought mixed results, with American Express outshining its rivals. As the market navigates these challenges, stay tuned for further developments.

FAQs:

How did Intel’s guidance impact the broader tech sector?

Intel’s disappointing first-quarter guidance led to a 12% drop in its shares, causing a ripple effect that negatively impacted the broader tech sector.

Why did Deutsche Bank express optimism despite Intel’s guidance miss?

Deutsche Bank noted that the weakness in Intel’s guidance wasn’t in its core PC and datacenter business. Management expressed confidence in a return to growth throughout 2024.

What factors contributed to the decline in chip stocks?

In addition to Intel’s challenges, Western Digital Corporation’s more than 3% decline, despite positive quarterly results, added to the wobble in chip stocks.

How did inflation developments influence the market ahead of the Fed decision?

The “core” personal consumption expenditures price index, the Fed’s preferred inflation gauge, showed a slowdown to a 2.9% pace in December. This could be welcomed by the Fed as they approach their upcoming policy meeting.