By Logan Gilland, CFP®
Have you ever gone through your spring cleaning ritual, found something you thought was lost and suddenly couldn’t wait to use it again? For me this year, it was an old Kenny Chesney T-shirt that had fallen to the back of a dresser drawer. For the market this week, it was Intel.
The semiconductor giant, which for a while seemed destined to fade into irrelevance, has been on a tear lately, finishing Friday with its best single-day gain since 1987. Intel has struggled to keep pace with Nvidia and AMD throughout the AI race, but it’s starting to find its footing. A significant earnings beat Thursday night, after revenues had declined in five of the last seven quarterly reports, helped push the market to all-time highs once again on Friday.
What I find so compelling about Intel’s move connects to a broader truth about markets: we must remember that some of the smartest, most driven people in the world are leading these major corporations. While the rest of us can watch and worry about the constantly evolving headlines like inflation, geopolitical conflicts, Fed policy, new technologies, these CEOs and their leadership teams are quietly steering their ships, making hard decisions, and doing everything in their power to move their companies forward. Despite the obstacles that seem to be perpetually in their path, many of which are entirely outside their control they find ways to adapt, reinvent, and keep up with the times.
This Intel news shows a market theme that is worth holding onto: at the end of the day, the market moves on earnings. Wars, inflation, Fed actions, the market tries to price all of it in real time, but in relation to what it believes will happen to corporate earnings.
This helps explain something many clients have asked about. Why are markets at all-time highs when there’s still no resolution to the conflict with Iran? My answer is that the market is looking at the scoreboard. Earnings season is underway, and so far, companies and their leaders appear to be taking the headlines in stride and continuing to perform. That could certainly change, the longer-term economic effects of the conflict are still unclear, but for now, the market seems to be moving on.
I still see reasons for caution. There have been announcements of large-scale layoffs in the technology sector, and those may be just the beginning as companies and workers alike grapple with the implications of AI.We continue to evaluate market developments in light of our long-term investment philosophy. The week ahead is significant, with Apple, Microsoft, Meta, Alphabet, and Amazon all reporting earnings. So far, it’s been a strong start to the season.
I hope you enjoy the rest of the weekend and maybe squeeze in a little spring cleaning.
Talk again soon.