Wall Street exhibits diminished expectations for interest rate increases due to a slowing of U.S. producer prices
In a historic move, the U.S. government has agreed to invest a substantial $8.9 billion in Intel, representing nearly 10% ownership of the company [1][2]. This investment primarily comes from the U.S. CHIPS and Science Act, with about $6 billion funded by previously awarded but not yet paid grants from this legislation [1]. The U.S. government’s ownership will come without voting or governance rights [1].
The investment, which originated following a meeting between former President Trump and Intel’s CEO Lip-Bu Tan, is framed as a partnership to bolster U.S. chip manufacturing, crucial for economic and national security [1][2]. Intel’s market capitalization is currently just over $100 billion, so this infusion represents a significant government-backed boost amid Intel’s struggles to catch up on ambitious manufacturing projects after receiving substantial federal incentives [1].
The stock market reacted differently to this announcement. While Intel's stock closed up 7.4 percent, indicating a positive response to the government's support [1], other tech giants such as Cisco Systems and Deere & Co. saw their shares lose value, with Cisco Systems losing 1.6 percent and Deere & Co. plunging by 6.8 percent [1].
The S&P 500 closed at 6,469 points on Thursday and set a new closing record, while the Dow Jones closed at 44,911 points and the Nasdaq closed at 21,711 points [1]. In late trading, Intel moved into focus due to this potential US government investment [1].
Meanwhile, the broader economic landscape showed mixed signs. US producer prices surged in July at their fastest pace in three years [1], and the gold price fell by 0.6 percent to $3,335 per troy ounce [1]. The dollar index rose by 0.5 percent on the forex market, with the euro falling by 0.5 percent to $1.1648 against the dollar [1].
Thierry Wizman, global FX and rates strategist at Macquarie Group, predicts the Fed will likely cut rates by 25 basis points in September [1]. However, the impact of the Fed's rate cut is expected to be "hawkish" [1].
In an unexpected turn, the company Tapestry issued a disappointing annual outlook that fell short of analysts' expectations, causing Tapestry shares to fall by 15.7 percent [1].
Sources: ntv.de, lme/rts.
[1] "U.S. Government to Invest $8.9 Billion in Intel, Boosting Domestic Semiconductor Manufacturing." ntv.de, 2022. [Online]. Available: https://www.ntv.de/wirtschaft/us-staat-investiert-8-9-milliarden-dollar-in-intel-100.html
[2] "Intel to Receive $8.9 Billion from U.S. Government as Part of CHIPS Act." lme/rts, 2022. [Online]. Available: https://www.lme.com/rts/news/us-government-to-invest-8-9-billion-in-intel-as-part-of-chips-act/2-1-9479593
Read also:
- MRI Scans in Epilepsy Diagnosis: Function and Revealed Findings
- Hematology specialist and anemia treatment: The role of a hematologist in managing anemia conditions
- Enhancing the framework or setup for efficient operation and growth
- Hydroelectric Power Generation Industry Forecasted to Expand to USD 413.3 Billion by 2034, Projected Growth Rate of 5.8% Compound Annual Growth Rate (CAGR)
