S&P flatlines, INTEL falls, TESLA recovers on 29 Jan 2024?
Happy Investors - man & woman
As described in my post (S&P soars: Time to sell US stocks including Tesla ! click to read), US market continued on a winning streak while Tesla Inc, lost its footing.
On Thu, 25 Jan 2024, US stocks rose despite downbeat earnings from Tesla and following a hotter-than-expected US economic growth.
A day later on Fri, 26 Jan 2024 it was a case of reversal of fortune.
S&P 500 finally ended it winning streak, falling just below the flatline. (see below)
US market on Fri, 26 Jan 2024:
DJIA: +0.16% (+60.30 TO 38,109.43). Only index that was in positive territory.
S&P 500: -0.07% (-3.19 TO 4,890.97). Marginally lower to close off the weekend.
Nasdaq: -0.36% (-55.13 to 15,455.36).
Q4 2024 Gross Domestic Product (GDP).
The main catalyst for US market continuous gain is none other than US’s preliminary Q4 2023 Gross Domestic Product (GDP) estimates.
The advance estimate showed the economy grew at an annualized pace of +3.3% during the period, much faster than the annualized pace of 2% expected by economists.
Having said that, it was lower than Q3’s 2nd revised estimate of 4.9%.
While this spells “good news” for the Biden administration on the run up to US’s November 2024 Presidential election (see above), I think US central bank will be ambivalent about the strong US economy performance, in their quest to bring inflation back to the target 2%.
Q4 2023 - Personal Consumption Expenditure (PCE) report.
Friday saw the Fed’s preferred inflation report - the core personal consumption expenditure (PCE) out to close off 2023.
December 2023 PCE data softened to 2.9% in the same period from November’s 3.2%. (see above)
Data is coming in slightly below the market forecast of 3.0% as well.
This is the 6th consecutive Core PCE decline since July 2023’s 4.2%.
Perhaps the Fed’s mentioned concept of “soft landing” is taking place after all; albeit at a slower pace than anticipated.
Intel continues to fall.
$Intel(INTC)$ continued falling on Friday after its disappointing fiscal Q1 2024 guidance for the top and bottom lines.
Intel’s Q4 2023 quarterly earnings.
Intel Q4 2023 data set - GAAP and non-GAAP
Revenue: $15.4 Billion vs market expectations of $15.15 Billion. This is a +10.0% gain YoY.
Earnings per share non-GAAP: $0.54 (adjusted) vs market expectation of $0.45. This is a +260% gain YoY.
Its 2023’s last quarter earnings (to be honest) was much better YoY.
What spooked Intel’s share performance then ?
It was the company's dour 2024 outlook that overshadowed Intel’s 2023 results.
Revenue (Q1 2024) : forecast between $12.2 / $13.2 Billion vs market expectations of $14.15 Billion. It is falling short of estimates by -$1.95 / -$0.95 Billion or -13.78% / -6.71%.
Earnings per share (Q1 2024): forecast was $0.13 vs market expectations of $0.33. It is falling short of estimates by -60.6%.
Core “PC and server-chips“ business segment would be at the low end of Intel’s seasonal sale range.
Intel’s second largest division, “Data Center and AI” is expected to decline “double-digit” percentages sequentially in Q1 2024 vs current Q4 2023 results.
This is the business segment that competes head on with $NVIDIA Corp(NVDA)$, $Advanced Micro Devices(AMD)$ and even $Amazon.com(AMZN)$. (see below)
Intel past 12 months performance
It is a wake up call for Wall Street that have placed much faith and trust in Intel’s do good in 2024.
In the past 12 months, both retail & institution investors collectively, have drove Intel’s price up by +64.67%.
In 2023, Intel and Tech-heavy Nasdaq made a “big” comeback, perhaps now is the time for the “hype” to take a breather?
Even US “celebrity” investment commentator Jim Cramer has chimed in, humming the same tune — that it is time to take some profits, it is the disciplined thing to do. (see above)
While Friday saw what might be a “temporary” halt to S&P 500 continuous record breaking level closing, things looked a little brighter for $Tesla Motors(TSLA)$ that managed a marginal recovery of “sort”.
Tesla managed to recover marginally to close off the week. (see above)
At one point (around 2pm), it was trading below its Thursday’s closing of $182.63.
Overall:
On Friday, it was up by +0.34% ($0.62) by the time market officially closed at 4:00pm US time.
For the week, Tesla is down by -13.67% (-$29.02).
YTD, Tesla is still down -26.23% (-$65.17).
As reported in the media, Tesla easily has $80 Billion wiped off its valuation 2 days after reporting its Q4 2023 earnings. (see below)
Lest we forget:
Tesla has undergone 2 stock splits within a very short span of 2 years apart.
First on 31 Aug 2020 and then on 25 Aug 2022.
The split were (a) 1-for-5 shares and (b) 1-for-3 shares respectively.
Its adjusted stock price after each split was $450 and $300 per share respectively.
Any new buyer who bought into Tesla after the 25 Aug 2022 split would be sitting on a -39.12% paper loss.
Would you continue to “dollar cost average (DCA” now or would you just sit it out to minimize further damage?
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Do you think US market will recover come Mon, 29 Jan 2024?
Do you think Tesla will fall again or begin its recovery on Monday, given the better than expected December 2023’s Core PCE?
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