What Happened: Shares of computer processor maker AMD (NASDAQ:AMD) jumped 5.2% in the afternoon session after investors bought the dip with the technology sector, which lost 4% last week, as yields fell. The yield on the 10-year Treasury yield, meanwhile, lost nearly 4 basis points. Other than potential positioning and a bounce after a losing week, there was nothing more specific. During the week, traders will get greater clarity into the path of rate cuts from the central bank. The December 2023 consumer price index is set for release, followed by the producer price index.
In addition, the company announced the AMD Radeon RX 7600 XT graphics card ahead of CES (Consumer Electronics Show) 2024. The graphics card promises seamless gaming experiences at 1080p and beyond with features like AMD FidelityFX Super Resolution and HYPR-RX. it is also targeted at content creators to improve productivity and quality.
In a market landscape where AI-powered tech solutions are gaining traction, presenting opportunities for increased productivity and growth, AMD appears to be positioning to capitalize on this trend.
Is now the time to buy AMD? Find out by reading the original article on StockStory.
What is the market telling us: AMD's shares are very volatile and over the last year have had 21 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago, when the company dropped 5.8% after the Nasdaq and S&P 500 continued to retreat while the Dow rose slightly. Interest rates rebounded a bit, and investors may be continuing to take profits after a strong calendar 2023. Other than that, we found nothing more specific for the broad move downward.
As a reminder, 2023 was a stellar year for the markets, with the S&P 500 surging by almost 25% and the NASDAQ Composite up over 40%. The final month of 2023 was notably strong, marked by a rally in equities and bonds.
The prevailing theme for 2024 revolves around the narrative of slowing inflation. The Federal Reserve is attempting to orchestrate a soft landing scenario, where inflation comes under control without damaging the economy (in the form of higher unemployment and lower GDP growth, for example). This could hurt overall consumer demand and the markets. As it stands, the market expects a 75 basis points cut in rates throughout the year. Any change in this expectation or narrative could move markets.
As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.
AMD is up 6% since the beginning of the year, and at $146.77 per share it is trading close to its 52-week high of $148.76 from December 2023. Investors who bought $1,000 worth of AMD's shares 5 years ago would now be looking at an investment worth $7,079.