Intel (NASDAQ:INTC) The company’s shares plunged in trading on Tuesday. The company’s share price was down 8.3% as of 2:45 p.m., according to data from S&P Global Market Intelligence.
Intel shares are losing ground today due to macroeconomic and geopolitical risk factors. Investors are concerned about weakness in the manufacturing sector and a report on US employment numbers later this week that could shake the market, and concerns about China invading Taiwan are back in the spotlight.
Is a recession looming?
Investors have been eagerly awaiting a rate cut from the Federal Reserve, and the central bank appears to be on track to deliver the expected cut this month. But the latest data shows that the U.S. manufacturing sector retreated in August, and investors are now concerned that the expected rate cut will not be the macroeconomic market catalyst that had been hoped for.
The Federal Reserve has been trying to control inflation while avoiding recession, the much-desired “soft landing” scenario. Inflation has moderated substantially, but recent U.S. economic data on other fronts has raised fears that a soft landing may no longer be a possibility.
Some recent economic data has been weaker than expected and previous employment figures have been heavily revised downwards. The US Department of Labor is expected to release August employment figures and heavy selling in Intel shares and the broader market reflects concerns that the figures point to a recession.
The dynamics between China and Taiwan also affect Intel shares
Signs pointing to a possible Chinese invasion of Taiwan have been a recurring bearish catalyst for semiconductor stocks over the past year. While the excitement around artificial intelligence and other growth drivers has been enough to drive big valuation gains for many chip companies, geopolitical risk remains a pressing concern for chip investors. Recent comments from the Taiwanese president have put those concerns back on center stage.
In an interview on Sunday, Taiwanese President Lai Ching-te said China should also try to reclaim territory from Russia if it claims rights to land it previously held as justification for a possible reintegration of Taiwan. While the comment was likely made in jest as a way to highlight a perceived inconsistency in China’s political positioning, it also suggests that potential aggressive moves by Taiwan’s more powerful neighbor are an immediate concern for the country’s leader.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Intel and recommends the following options: Intel call options expiring November 2024 at $24. The Motley Fool has a disclosure policy.
Why Intel Stock Is Plunging Today was originally published by The Motley Fool