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Today in the Market (1/27/2023)

Good Evening! After falling early in the day, US equities rose on Friday as investors weighed in on new economic data, particularly consumer expenditure data, a frequently monitored metric by the Federal Reserve.

The S&P 500 rose 0.25%, while the Dow Jones gained 0.95%. The Nasdaq Composite was up 0.95%, capping off its best week since November.

EXPECT THE WORST

Intel Corp. (INTC) is expecting one of the worst quarters in company history, sparking a larger selloff of semiconductor makers as personal-computer sales slump. Intel provided a sales range that was billions of dollars below analysts’ expectations, indicating that revenue might fall to the lowest quarterly level since 2010.

  • Revenue: $14.04 Billion vs. $14.9 Billion expected
  • Adjusted Earnings Per Share: $0.10 vs. $0.20 expected

Why such a decline? Chipmakers suffer from a sharp drop in demand for PC chips, which has wiped out earnings and forced drastic layoffs throughout the sector. Intel’s forecast indicates that more hardship is on the way. In order to save up to $10 billion, the firm is cutting employment and limiting investment in new factories. It is suffering greatly as a result of competitors gaining market share.

Speaking of Market Share… Intel continues to dominate the server CPU industry with a market share of more than 70%. However, its grip on that lucrative sector has weakened. In recent years, the corporation has been hesitant to release new products, allowing competitors such as AMD to gain ground. Some customers are also creating their own chips to replace Intel CPUs.

BACK ON TRACK?

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Tesla Inc.’s largest weekly rise since 2013 is giving investors confidence that Elon Musk’s electric-vehicle manufacturer may finally be on the mend after a catastrophic 2022.

Let’s Look at the Numbers! The stock gained 33% this week, the biggest since it gained 41% in May 2013. On Friday, the stock finished 11% higher at $177.88, the highest since December 9, and a 65% increase from the Jan. 3 closing low of $108.10.

Why The Rally? The quarterly earnings and Musk’s conference call on Wednesday gave investors much-needed clarity about the company’s plan. Tesla’s CEO dismissed concerns about consumer demand for the company’s automobiles, claiming that orders are flowing in at almost double the pace of manufacturing since the EV manufacturer cut pricing two weeks ago.

However, Musk Is A Double Edge Sword… As the previous year has shown, Tesla’s erratic CEO can be both a blessing and a nightmare for the firm. Even some long-term bulls are hesitant of announcing a bottom.

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