The market finally turned positive Friday, after three consecutive days of the Dow Jones industrials closing lower in response to U.S. retailers issuing weak earnings forecasts and an uptick in unemployment claims.
Identifying the market’s trend is difficult, but a break below the June closing lows of 12,101.46 on the Dow Jones industrials would be a clear indication of lower prices and a bear market signal.
Looking back, seldom have the workings of our legislative process and the competency of our elected leaders been so widely doubted. With elections completed and the “fiscal cliff” deadline looming, the U.S. government faces a crucial test.
Will we go the way of Europe, unable to do what’s best for the country because of divergent interests and worldviews? The stock market is watching our legislators’ actions closely, along with any breakdown below the June lows.
Following is an update on recent quarterly reports from Town Crier “50” Weekly Stock Index companies.
• NVIDIA Corp. (NVDA; $11.69) reported third-quarter adjusted earnings of 34 cents per share, beating the industry consensus estimate of 30 cents. The Santa Clara-based microchip maker posted quarterly earnings of $178 million profit on sales of just over $1 billion.
NVIDIA’s business decreased 4.2 percent on a year-to-year basis because sales of chips used in PCs are down due to lower demand for computers. However, the chips are now plugged into smartphones and tablets.
At the end of the quarter, NVIDIA reported cash, cash equivalents and marketable securities of $3.4 billion, up from $3.3 billion in the previous quarter. For the fourth quarter, the company expects revenue to be in the range of $1.025 billion to $1.175 billion.
During NVIDIA’s Nov. 9 earnings report, representatives mentioned that they plan to initiate payment of a quarterly cash dividend and maintain the company’s 2.7 billion share repurchase program through December 2014.
Although numerous analysts suggest holding NVIDIA stock, some think it is the most attractive PC chip stock in the sector, with growth opportunities.
• Applied Materials Inc. (AMAT; $10.34) reported earnings last week, posting big fourth-quarter drops. Officials said the company lost $515 million, or 42 cents per share, in the quarter, compared with a profit of $456 million, or 34 cents per share, a year ago. Revenue dropped 25 percent to $1.66 billion.
“For our fourth quarter, Applied delivered profit at the high end of our outlook despite challenging industry conditions in the semiconductor, solar and display areas,” said Mike Splinter, chairman and CEO. “Our strong cash flow performance allowed us to increase our quarterly dividend and share buybacks, returning $1.85 billion to stockholders in the year.”
Applied Materials’ stockholders dividend offers a 3.40 yield at 36 cents a share.
Disclosure: The author of this article maintains a small exposure in Applied Materials.