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Dow Jones Sinks; Boeing Stock Rises Again; Intel's New Chip a Midrange Winner

By Timothy Green – Updated Jun 4, 2020 at 1:36PM

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A major airline is ramping up flights for the summer as demand returns, and Intel's new midrange PC chip gets a positive review.

After rising in the morning, the Dow Jones Industrial Average (^DJI -1.15%) was down 0.4% by 12:45 p.m. EDT on Thursday. Initial claims for unemployment benefits for the week ended May 30 were 1.877 million on a seasonally adjusted basis, down from the previous week but higher than economists were forecasting.

The stock of Boeing (BA 0.07%) surged on Thursday, adding to its Wednesday rally, after American Airlines announced increased flights for the summer. Shares of Intel (INTC -1.66%) were also up. While it faces intense competition from Advanced Micro Devices, the company's latest PC chips got a positive review.

A plane.

Image source: Getty Images.

Boeing rally continues

Shares of Boeing, which have been brutalized this year as the pandemic decimated demand for air travel, have more than doubled from their March low. On Wednesday, rumors of an activist investor stake pushed the stock higher. On Thursday, it was a positive update from American Airlines that drove Boeing's rally.

American announced that it was increasing domestic flights for the summer travel season in response to consumer demand. The airline now plans to fly 55% of its domestic schedule and 20% of its international schedule in July compared with the prior-year period.

American reduced its domestic schedule by 80% in May, reflecting a deep slump in demand for air travel amid the worst of the pandemic. But the airline is seeing steady growth in passenger volumes. Between May 24 and May 29, American served roughly 110,000 passengers daily. That's up from just 32,000 average daily passengers in April.

While a full recovery in demand may take years, particularly for international flights, a quick partial recovery for airlines is good news for Boeing, which needs airlines to order and take delivery of new commercial jets. That requires Boeing's airline customers to survive this crisis, and to have enough confidence in future demand to make long-term plans.

A second wave of coronavirus cases later this year could put an end to this recovery in passenger demand. The U.S. is still adding around 20,000 new confirmed cases daily, according to Johns Hopkins University, and mass protests in many U.S. cities in recent days could lead to a surge in confirmed cases in the coming weeks. There are still a lot of unknowns.

Shares of Boeing were up 4.6% by early Thursday afternoon. The stock is now up more than 100% from its 52-week low, but it's still down more than 50% from its 52-week high.

Intel's latest midrange chip gets a positive review

When Advanced Micro Devices launched its third generation of Ryzen PC CPUs about a year ago, Intel was put in a tough spot. AMD's chips offered more cores at lower prices than Intel's chips, and they greatly closed the performance gap. For years, Intel's chips were far and away superior in terms of performance to what AMD could muster. No more.

Intel has done some price-cutting, both directly and indirectly, to level the playing field. With its latest line of PC chips, Intel has struck a balance between performance and price that should help beat back the resurgent AMD. In particular, the i5-10600K gives Intel a strong footing in the midrange portion of the market.

In a review published on Thursday, the website Tom's Hardware called Intel's i5-10600K "the mainstream gaming champ." Intel has added Hyper Threading, which allows a single core to run two threads simultaneously, without raising the price. That's a de facto price reduction, since Hyper Threading was previously reserved for Intel's higher-end chips.

The result is a chip that beats out AMD's less expensive Ryzen 3600X in gaming applications, and it matches the more expensive Ryzen 3700X. In applications that benefit from many threads, the additional threads on Intel's new chip help it better compete with AMD's chips.

The PC CPU market is the most competitive it's been in years. Intel's complacency opened the door for AMD to stage a comeback, and now the company is being forced to compete on price. While AMD will likely continue to win market share, Intel's new chips should reduce the damage. Intel stock was up about 1.8% by early Thursday afternoon.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

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Stocks Mentioned

The Boeing Company Stock Quote
The Boeing Company
$132.20 (0.07%) $0.09
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Dow Jones Industrial Average (Price Return)
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