Investors got a reprieve on Tuesday as the major U.S. stock indexes staged a rally. The Dow Jones Industrial Average (DJINDICES:^DJI) was up 7.7% at 11:25 a.m. EDT, rising back above the 20,000 level for the time being.
There hasn't been any good news on the novel coronavirus front. Cases and deaths continue to soar as more U.S. cities and states announce stricter measures to combat the virus. The U.S. now has over 46,000 confirmed cases and nearly 600 deaths, according to data from Johns Hopkins University.
Turning to individual stocks, both Intel (NASDAQ:INTC) and Chevron (NYSE:CVX) booked major gains. Intel was up despite the company suspending its share-buyback program, and Chevron soared after the company slashed its plans for capital spending.
Intel stops buybacks
Shares buybacks were all the rage as the market soared over the past few years. Now, with the novel coronavirus pandemic threatening to cause a severe contraction in the U.S. and global economies, companies are pulling back to preserve cash.
Chip giant Intel is the latest company to put an end to share buybacks for the moment. The company announced via a filing with the Securities and Exchange Commission on Tuesday that it was suspending its share-buyback program due to uncertainty surrounding the length and severity of the pandemic. Intel will continue to pay a dividend, and the company said that its factories continue to be operational. Intel has already used $7.6 billion of its $20 billion share-repurchase program announced late last year.
Intel sells processors that power PCs and servers, and demand for both could slump as the global economy enters recession. At the end of February, IDC predicted that global PC shipments would decline by 7.1% in 2020 because of the pandemic. In the server chip business, if any large cloud computing providers pull back on expansion plans, sales in Intel's data center group would suffer.
On top of weaker demand in the coming months, Intel faces increased competition from Advanced Micro Devices. AMD now offers PC and server chips that are highly competitive. Intel has already been forced to cut prices, both directly and indirectly through new product lines.
Intel stock was up about 6.8% late Tuesday morning as the broader market rallied. Shares are still down roughly 24% from their 52-week high.
Chevron slashes capital spending plan
Shares of Chevron were up big on Tuesday after the oil major announced plans to slash its 2020 capital spending plan. Chevron stock was up 13.3% by late morning, erasing some its losses over the past few weeks.
A steep decline in oil prices has led Chevron to take steps to preserve cash. The company now plans to spend $16 billion this year on organic capital and exploratory spending, a 20% reduction. Upstream unconventionals will see a $2 billion reduction; upstream projects and exploration spending will be cut by $700 million; upstream base business spending will see a $500 million cut; and downstream, chemical, and other will have spending reduced by $800 million.
Chevron now expects roughly flat production in 2020, excluding recent asset sales and price-related contractual effects. In the Permian Basin, Chevron expects production to be 20% below prior guidance by the end of the year.
On top of cutting capital spending, Chevron has suspended its share-repurchase program. The company also remains on track to reduce run-rate operating costs by more than $1 billion this year.
While Chevron stock is having a good day on Tuesday, shares remain down 52% from their 52-week high.