In a market dance influenced by both corporate outlooks and economic indicators, Friday witnessed a retreat in stocks, spurred by a less-than-rosy forecast from Intel and the meticulous scrutiny of a pivotal inflation figure with potential ramifications for the timing of an imminent interest rate adjustment.
The S&P 500 (^GSPC) tiptoed just beneath the equilibrium after a triumphant Thursday that saw the benchmark notch another record high. The Dow Jones Industrial Average (^DJI) maintained a state of virtual stasis, while the Nasdaq Composite (^IXIC), laden with tech stocks, descended by 0.2%.
Tech stocks bore the brunt of the downturn following Intel’s (INTC) disappointing first-quarter outlook, shattering the euphoria fueled by artificial intelligence that had propelled stocks to unprecedented heights. Intel’s shares, emblematic of the semiconductor sector, plunged over 10% during premarket trading, casting a shadow also over industry counterparts AMD (AMD) and Nvidia (NVDA).
While the tech slump darkened the market mood, the release of the December PCE index presented a silver lining on the inflation front. The “core” PCE, the Federal Reserve’s preferred gauge, revealed a sub-3% annual growth rate, marking the slowest uptick since March 2021. This favorable inflationary figure, combined with an unexpectedly robust early estimate for fourth-quarter US GDP, provides credence to the belief that the US economy is poised for a “soft landing.”
The upcoming rendezvous of central bankers at their inaugural policy meeting of the year will be closely observed. Despite widespread anticipation of a status quo in interest rates, the recent cascade of positive economic indicators could prod them towards contemplation of rate cuts later in the year, with March being floated as a plausible starting point.
Simultaneously, investors will be on the edge of their seats for the next wave of corporate earnings reports, seeking deeper insights into the well-being of Corporate America and the broader economy. The spotlight on Friday shines on Colgate-Palmolive (CL) and American Express (AXP), particularly in the wake of Visa’s (V) subdued revenue-growth projection, heightening the stakes and the intrigue in an already tumultuous market environment.
In conclusion, the retreat in stocks, triggered by Intel’s somber outlook, underscores a moment of cautious recalibration among investors as they assess the broader implications of economic headwinds and uncertainties in the market landscape.
Source: Yahoo Finance
