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Action Investments Limited - Investors are concerned about the Federal Reserve's next move
Shares of semiconductor specialist Advanced Micro Devices (AMD -6.17%) were down today, most likely in response to new unemployment claims data from the United States.
AMD's stock has dropped 6.4% as of 4:00 p.m. ET.
There was no company-specific news today, therefore AMD's stock price fell. Instead, AMD stockholders appear to have been responding to the latest unemployment claims news. The Labor Department reported today that there were 193,000 unemployment claims for the week ending September 24, which was lower than the expert average of 215,000.
While a healthy labor market is wonderful for job seekers, it also implies that the Federal Reserve can continue to hike interest rates rapidly without concern of negatively impacting the employment market.
However, AMD stockholders, and investors in general, are concerned that the Fed may raise interest rates too soon, sending the U.S. economy into a recession.
Any severe economic downturn might harm AMD's chip sales at a time when supply chain challenges are already generating problems in the semiconductor business.
It's hardly unexpected that AMD's stock has plummeted in response to the new labor market statistics, but it's still no joy for tech investors. There is genuine fear that the Fed is acting too aggressively, and several technological firms have already slashed employees, imposed recruiting freezes, and issued warnings about a future economic slowdown.
Long-term investors understand that buying and holding strong firms for five years or more is the greatest way to ride out market downturns, but AMD's share price is likely to fluctuate more as investors try to judge the general strength of the economy.
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