Why Intel Has Launched Ahead of the Dow Jones Today

 


The Dow Jones Industrial Average (DJINDICES: ^DJI  )  is down after some mixed economic reports in the U.S. and two economic reports China showing that growth there continues to slow. Intel (NASDAQ: INTC  ) is defying the Dow's drop following an analyst upgrade. As of 1:20 p.m. EDT the Dow is flat at 16,561 points. The S&P 500 (SNPINDEX: ^GSPC  ) is down a mild 0.22% to 1,887.

There were three major U.S. economic releases today:

Report

Period

Result

Previous

New unemployment claims

March 22 to March 29

326,000

310,000

Trade deficit

February

$42.3 billion

$39.3 billion

ISM nonmanufacturing PMI

March

53.1%

51.6%

While the trade deficit surprised with a 7.7% jump to $42.3 billion after the U.S. exported fewer jets and less fuel, the jet industry in particular can experience lumpy sales, so you shouldn't read too much into the number. More important are the Institute for Supply Management's nonmanufacturing purchasing managers' index and the new unemployment claims report, which were basically in line with economists' expectations.

Both show that the economy continues to slowly expand and the employment market continues to get stronger. The ISM nonmanufacturing PMI was led higher by a six-point jump in the employment index from 47.5 to 53.6. Numbers above 50 indicate expansion, while numbers below 50 indicate contraction. In February, the employment gauge fell nine points to 47.5, indicating contraction in the employment market. The move back above 50 gives more credence to the view that the winter slowdown in employment owed to the particularly harsh weather the U.S. experienced and was not the start of an overall slowdown.

Source: Institute for Supply Management.

Yesterday China released two economic reports showing that the Chinese services sector is growing but at a slow rate:

Report

Period

Result

Previous

Chinese nonmanufacturing PMI

March

54.5

55

HSBC China nonmanufacturing PMI

March

51.9

51

The Chinese economy has been a driver of global growth since the financial crisis. It's worth keeping an eye on, as the economy has structural problems including too much debt, a property bubble, and slowing growth -- all of which the country will eventually have to deal with. If the economy continues to slow, it will be felt around the world, particularly in the commodity markets.

Today's Dow leader
Today's Dow leader is Intel, up 1.6% after analyst Ruben Roy of Piper Jaffray upgraded the company from "neutral" to "overweight" and set a price target of $30 per share, saying he expects PC sales to remain stable this year. Roy also said, "We also believe that [Intel] is making strides on the mobile processor front and, while profitability for the business will likely remain a headwind for some time, we do expect [Intel] to gain market share traction in 2014 and improve profitability in 2015."

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