Dow Jones sinks; Boeing shares are rising again; Intel’s new mid-range winner
After getting up in the morning, the Dow Jones Industrial Average (DJINDICES: ^ DJI) was down 0.4% as of 12:45 p.m. EDT Thursday. Initial jobless claims for the week ended May 30 stood at 1.877 million on a seasonally adjusted basis, down from the previous week but higher than economists expected.
The stock of Boeing (NYSE: BA) surged Thursday, adding to its rally on Wednesday, after American Airlines announced an increase in flights for the summer. Actions of Intelligence (NASDAQ: INTC) were also on the rise. As it faces intense competition from Advanced micro-systems, the company’s latest PC chips have received positive reviews.
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The Boeing rally continues
Boeing shares, which were brutalized this year as the pandemic decimated demand for air travel, more than doubled from their March low. Wednesday, rumors of activist investor involvement pushed the stock higher. On Thursday, it was a positive update from American Airlines that led to the Boeing rally.
American announced that he was increase in domestic flights for the summer 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 to the period the previous year.
American cut its domestic schedule by 80% in May, reflecting a sharp drop in demand for air travel amid the worst of the pandemic. But the airline is experiencing constant growth in the number of passengers. Between May 24 and May 29, American served approximately 110,000 passengers per day. This represents only 32,000 average daily passengers in April.
While a full recovery in demand may take years, especially for international flights, a rapid partial recovery for Airlines companies is good news for Boeing, which needs airlines to order and take delivery of new commercial jets. It requires Boeing’s airline customers to survive this crisis and have enough confidence in future demand to make long-term plans.
A second wave of coronavirus cases later this year could halt this upturn in passenger demand. The United States is still adding about 20,000 new confirmed cases a day, according to Johns Hopkins University, and mass protests in many US cities in recent days could lead to an increase in confirmed cases in the coming weeks. There are still a lot of unknowns.
Boeing shares were up 4.6% in early Thursday afternoon. The stock is now up over 100% from its 52 week low, but still down over 50% from its 52 week high.
Intel’s latest mid-range chip gets positive review
When Advanced Micro Devices launched its third generation of Ryzen PC processors About a year ago, Intel found itself in a difficult situation. AMD’s chips offered more cores at lower prices than Intel’s chips, and they significantly narrowed the performance gap. For years, Intel’s chips were far superior in performance to what AMD could muster. No more.
Intel has made price cuts, 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 ward off AMD’s resurgence. In particular, the i5-10600K gives Intel a solid footing in the mid-range of the market.
In a review published Thursday, the Tom’s Hardware website called the Intel i5-10600K a “champion of mainstream gaming.” Intel added Hyper Threading, which allows a single core to run two threads simultaneously, without increasing the price. This is a de facto price reduction, since Hyper Threading was previously reserved for high-end chips from Intel.
The result is a chip that beats AMD’s cheaper Ryzen 3600X in gaming applications, and matches the more expensive Ryzen 3700X. In applications that have many threads, the extra threads on Intel’s new chip help it compete better with AMD’s chips.
The PC processor market has been the most competitive for years. Intel’s complacency made AMD a comeback, and now the company is forced to compete on price. While AMD will likely continue to gain market share, Intel’s new chips should reduce the damage. Intel stock was up about 1.8% in early Thursday afternoon.
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