Before the open this morning, JP Morgan analysts downgraded semiconductor king Intel (INTC) from “Buy” to “Hold”. They suggested Intel experienced a late quarter slowdown in orders that will hurt the 4th quarter and therefore slightly lowered their 4th quarter revenues and earnings estimates (“Intel Takes One For The Team” (subscription required).
But their quibbles don’t really account for the huge move in the stock, the Philadelphia Semiconductur Index (SOX) generally and, in fact, the entire tech sector. Intel was the most actively traded stock on either stock exchange and was crushed, down 8.11%. The SOX was also crushed as was the tech sector which was the worst performing sector in the S&P.
Intel is now down 19% from its 52 week closing high reached only a month ago at $27.98 on December 6th (INTC 3 Month Chart).
Volume in Intel shares was the 3rd most in the last 52 weeks and volume on the Nasdaq was 2.5 billion, approaching the levels seen in the aftermath of the Cisco Conference Call.
What it comes down to is fears about the economy and how tech spending will do if a slowdown or a recession does in fact develop.
Disclosure: Top Gun has no position in Intel (INTC) shares but is short the Nasdaq-100 (QQQQ).