Weekly Recap: Intel Crashes, Tariff Whiplash Fades
S&P 500 falls 0.5% as semiconductor weakness offsets tariff relief. Fed meeting and megacap earnings loom next week.
The week that started with tariff panic ended with earnings carnage.
The S&P 500 fell 0.5% over five sessions, with the Dow dropping 0.6%. Only the Nasdaq managed a gain, adding 0.2% as megacap tech provided modest support. It was a week defined by whiplash—first geopolitical, then corporate.
The Tariff Saga
Monday's market plunge set the tone.
President Trump's weekend threat to impose tariffs on eight European allies over Greenland sent the S&P 500 down 2.1%—its worst session since October. The VIX spiked above 21. Gold hit new highs as investors fled to safe havens.
Then came the reversal. By Wednesday, Trump had backed off the threats after reaching what he called a "framework" agreement with NATO. Stocks recovered most of Tuesday's losses in a single session.
The episode revived talk of the "TACO trade"—Trump Always Chickens Out. Investors who bought the dip were rewarded, but the volatility reminded everyone that policy risk hasn't disappeared.
Intel's Collapse
Friday's action belonged to Intel.
The chipmaker crashed 17% after issuing weak Q1 guidance and warning of supply constraints. It was Intel's worst day since August 2024, erasing $35 billion in market value.
The irony is that Q4 results beat expectations. Adjusted EPS of $0.15 topped the $0.08 consensus. Revenue of $13.7 billion exceeded forecasts. But CEO Lip-Bu Tan's sobering assessment of the turnaround timeline spooked investors who had bid the stock up 147% in the prior year.
Trading volume hit 290 million shares—triple the average. That kind of capitulation either marks a bottom or signals something worse ahead.
The broader chip sector held up better than Intel. AMD rose 2.3% on reports that China may order Nvidia's H200 chips. Nvidia gained 1.5%. But Intel's failure to participate in the AI boom, even after its recent rally, raised fresh questions about its competitive position.
Consumer Bright Spot
Not everything was negative.
Friday's University of Michigan sentiment data beat expectations, with the final January reading rising to 56.4 from December's 52.9. More importantly, year-ahead inflation expectations dropped to 4.0%—the lowest since January 2025.
The improvement was broad-based, spanning income levels, age groups, and political affiliations. That breadth suggests something more fundamental than portfolio effects or partisan mood swings.
For the Fed, cooler inflation expectations provide cover for the current pause. Markets price near-zero odds of a rate cut at next week's meeting.
What to Watch
The coming week is stacked.
The Fed meets Tuesday and Wednesday, with the rate decision due Wednesday at 2 PM. No change is expected, but the statement and Powell's press conference will be parsed for clues about the path forward.
Four Magnificent Seven companies report: Meta, Microsoft, and Tesla Wednesday; Apple Thursday. Together they represent $10 trillion in market cap. Results will shape sentiment for the rest of earnings season.
Beyond megacap tech, over 100 S&P 500 companies report including Caterpillar, Boeing, Visa, and Mastercard. The industrial and financial names will provide reads on broader economic health.
Market Levels
The S&P 500 closed the week at 6,118, holding above its 50-day moving average at 5,890. That support level was tested Tuesday during the tariff selloff but held.
Resistance sits at the January 7 high near 6,090—the market spent Friday trying and failing to reclaim it decisively.
The VIX settled at 16.5, down sharply from Tuesday's 21+ spike but still elevated relative to December's calm. Options premiums remain rich for sellers.
The Bottom Line
Markets survived the week's stress tests without breaking.
Tariff threats came and went. Intel's collapse didn't drag down peers. Consumer sentiment improved. The setup into next week's Fed meeting and megacap earnings is cautious but not panicked.
The question is whether big tech can deliver. Microsoft, Meta, Tesla, and Apple need to justify their valuations at a moment when AI spending scrutiny is intensifying and market breadth is finally improving—65% of S&P 500 stocks are now outperforming the index, the second-best reading in half a century.
A broadening market is healthy. But if the Magnificent Seven stumble, that rotation could accelerate into something more painful for index investors still overweight the names that led for two years.