Intel Cuts Revenue Forecast
On Thursday, Intel Corp (O:INTC) cut its quarterly revenue outlook by almost $1 billion. The company stated that the main reason for this cut has been the reluctancy for customers to upgrade from Windows XP which is already a thirteen year old operating system. Also, this reluctancy has caused a decline in PC sales while a declining euro and other economic factors have negatively impacted the giant chipmaker. Intel is hoping to post 1st-quarter sales of $12.8 billion which will be down from the expected $13.7 billion forecast in mid-January while also below Wall Street forecasts. Despite this cut, Intel has clearly stated that their strategy has not changed and the company will continue to implement it accordingly. Following the announcement, Intel shares declined to $30.76, down 4%. The shares of AMD, Intel’s rival chipmaker, also declined almost 4% while the shares of Microsoft dropped 2.4% at $41. Last year, Microsoft stopped to provide technical support for Windows XP which has helped to encourage consumers and businesses to upgrade to newer machines. With over 50% of the tablet and desktop operating system market, Windows 7 is the most popular operating system while Windows XP fell to 11% market share last month. Also, according to BlueFin Research Partners, only 75-76 million PCs will be shipped worldwide in the 1st quarter. This will mark a decline from the preceding quarter of almost 9%.
After a poor performance over the last few days, U.S. stocks recorded the biggest monthly gain on Thursday. This came after poor retail sales data negatively impacted investor expectations regarding rate hikes by the Federal Reserve. It also helped the euro (EUR) to rebound from a twelve-year low against the U.S. dollar (USD). Data showed monthly sales at retailers declined in February marking the 3rd consecutive month of declines. This prompted concerns that consumers are not able to maintain the economic engine in the U.S. and as a result, the Dow Jones and the S&P 500 were pushed into positive territory for the year. At the close of trading, the Dow Jones Industrial Average (DJIA) advanced 1.5%, or 259.83 points, to 17,895.22. Also on the upside was the S&P 500 index (SPX) which climbed 1.3%, or 25.71 points, at 2,065.95. This marked the highest gain for both indexes since the 3rd of February. Following the upward trend was the Nasdaq Composite index (COMP) which ended the day up 0.9%, or 43.35 points, at 4,893.29. According to BATS Global Markets data, almost 6.5 billion shares were exchanged on the day compared with the 6.6 billion average for the month to date.
In Forex trading on Thursday, the U.S. dollar (USD) traded lower. This came after data showed an unexpected drop in retail sales as well as a decline in jobless claims last week. In their report, the Commerce Department in the U.S. reported that retail sales in February declined 0.6 percent which missed forecasts for an increase of 0.3%. This also marked the 3rd consecutive monthly decline. After a 0.1 percent decline in January, core retail sales were flat in February while a separate report showed an increase in February U.S. import prices of 0.4%. This broke 7 months of declines but also indicated muted inflation pressures as a result of lower petroleum prices. Meanwhile the Labor Department reported that the number people filing new claims for unemployment benefits last week declined to 289,000, down 36,000. This was a clear indication of a strengthening labor market. Against the euro, the greenback traded lower with EUR/USD at 1.0620, up 0.69%. The British pound traded higher against the greenback with GBP/USD trading at 1.4907, up 0.13% while the Japanese yen also traded higher with USD/JPY down 0.17 percent to 121.24. Also, the U.S. dollar index was at 99.23, down 0.41%.
In Asian trading on Friday, prices of crude oil declined in response to a strengthening U.S. dollar (USD). WTI crude oil for delivery in April traded at $46.95 a barrel, down 0.22% on the NYMEX. On Thursday, domestic oil futures declined as a result of the unexpected drop in U.S. retail sales. Meanwhile, Brent crude oil for delivery in April traded at $57.47, down 0.42 percent on the Intercontinental Exchange (ICE). On Thursday, the international benchmark traded with volatility ranging from a high of $59.15 to a low of $56.75.