Our two-day streak of staying above 8,000 came to an end today. The Dow pulled back 137.63 points to close at 7,920.18. The market was clearly hurt by the weak retail sales report that came out this morning.
The big news after the close came from Intel (INTC). The chip company reported that its first-quarter earnings plunged 55% but that was well above Wall Street’s forecast. The Street had obviously set the bar very low.
Intel earned 11 cents a share and the consensus on Wall Street was just three cents a share. In fact, some analysts thought Intel would actually lose money for the first time in 25 years. Their sales were down 26% but again, expectations were even lower. That shows you just how pessimistic the mood is on the Street.
Intel is an important tech stock and it’s one of those companies that set the tone for many others. The good news is that Intel said that PC sales have “bottomed out.” My immediate thought is that it has to because business can’t get much worse. In the fourth quarter, Intel’s profits dropped by 90%.
This disappointing news is that the company didn’t give any guidance for future quarters. As an investor, this is frustrating, but I understand how the company must feel. You don’t want to find yourself lowering previous forecasts later on in the quarter.
I’ve recently upgraded Intel from a sell to a hold. Today’s report is encouraging but I still want to see clear improvement.