Intel (INTC +8.78%) stock got hit hard again in Monday's trading. The semiconductor company's share ended the daily session down 6.4%, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500, Nasdaq Composite, and Dow indexes closed out the session down 3%, 3.4%, and 2.6%, respectively.
NASDAQ: INTC
Key Data Points
After a brutal sell-off last Friday, Intel stock lost ground again today amid a pullback for the broader market stemming from a reaction to carry trading using the Japanese yen. The chip specialist's share price was likely also negatively impacted by bearish research notes from analysts following last week's very disappointing second-quarter report.
Monday was a bad day for Intel -- and the broader market
Intel stock hit a fresh 10-year low on Monday, but it was far from the only company to see a significant valuation contraction. The broader market sank following selling action and concerns about risks associated with "carry trade" strategies using the Japanese yen. Due to low interest rates in the country, some investors have been borrowing the country's currency and then pouring it into the "Magnificent Seven" and other growth-oriented stocks.
But the risks associated with this carry-trade have risen lately, and it's caused widespread selling action. On July 31, the Bank of Japan raised its base interest rate from 0.1% to 0.25% -- making it more expensive and riskier to borrow money and put it into stocks. Recent turbulence for big-tech valuations also pushed the levels of risk associated with this carry-trade strategy higher, and a surge of related stock selling had compounding effects.
What comes next for Intel?
With today's pullback, Intel stock is now down 60% across 2024's trading and 71% from its 10-year high. The company could have a tough road ahead.
Intel's Q2 report signaled major structural issues within in the business. While it was already broadly understood that the company was orchestrating a turnaround to better position itself for opportunities in artificial intelligence (AI) and data centers, the recent earnings release signaled that the chip specialist is much earlier in its comeback initiatives than previously thought.
To aid new cost-cutting initiatives, Intel announced that it would be laying off roughly 15% of its workforce and suspending its dividend. But the company is scaling back and restructuring at a time when competitive positioning in AI and other trends is becoming increasingly important.
