Intel stock dropped over 7% on Tuesday as geopolitical uncertainty and rising oil prices pushed investors away from capital-intensive growth stocks.
President Trump said that no active negotiations with Iran are underway, reversing prior claims.
Rising bond yields and persistent inflation are creating a challenging environment for stocks like Intel that need significant capital investment to fuel future growth.
Intel Corp. (NASDAQ: INTC) stock is down on Tuesday, falling 7.1% as of 1:47 p.m. ET. The S&P 500 and the Nasdaq Composite are down 0.6% and 1.2%, respectively.
With no clear end to the Iran war in sight, traders appear wary of capital-intensive growth stocks trading at rich multiples -- like Intel's.
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On Tuesday, President Trump said that no active negotiations were underway with Iran, a reversal of his prior claims that they were. The President said on the social media platform Truth Social that "There are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran."
The Iran war has sent oil prices skyrocketing, and though they're down from their peak earlier in the conflict, they remain nearly 30% higher than their pre-war levels.
The elevated oil prices come at a time when the Federal Reserve is still struggling to tame persistent inflation. The combo has helped drive bond rates higher, with the 30-year U.S. Treasury rate reaching its highest point in nearly 20 years.
Image source: White House.
In an environment like this, investors tend to prefer safer investments and rotate out of stocks that have significant growth already baked into their share prices, especially those that will need to continue spending serious money to see that growth materialize.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel. The Motley Fool has a disclosure policy.