Stocks posted moderate gains on Wednesday, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) indexes both adding less than a quarter of a percentage point.
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Oil prices touched their highest point in a year thanks to news of growing supply, and that bounce helped push the United States Oil Fund ETF (NYSEMKT:USO) to a 2% gain. Meanwhile, VanEck Vectors Gold Miners ETF (NYSEMKT:GDX) rose by 3% thanks to an uptick in the price of gold as the U.S. dollar further weakened against major currencies.
Intel's downbeat forecast
Down 6%, Intel was the worst performer on the Dow despite announcing solid third-quarter results. The tech titan posted double-digit sales growth in its data center and Internet of Things divisions, which helped overall revenue jump 9% to $15.8 billion.
Earnings rose at a slightly slower pace as gross profitability slipped. Yet Intel still generated $0.69 in earnings per share, 8% higher than the prior-year period and just above management's September guidance. "We're executing well," CEO Brian Krzanich said in a press release, "and these results show Intel's continuing transformation to a company that powers the cloud and billions of smart, connected devices."
Investors looked past those healthy gains to focus on the relatively weak projections for the quarter ahead. Its sales growth guidance calls for a 5% improvement to $15.7 billion, while consensus estimates were hoping for closer to $15.9 billion. Profits are expected to decline, meanwhile, as Intel ramps up investments in the business including spending on factory costs for the new 10-nanometer node.
Neither of these challenges mean that Intel's growth plan is in danger. But they do highlight the fact that many of its markets, especially the consumer PC segment, aren't fully recovered yet.
Vasco lowers its growth outlook
Shares of digital security specialist Vasco dove by 16% following its preliminary third-quarter earnings report that showed a surprising slowdown in demand. Revenue will weigh in at $43 million this quarter, executives explained, as the company barely broke even with profits of $0.01 per share. These figures are below management's expectations and reflect weaker demand for its digital signature products in the European market. "Some of our large banking customers are adapting to market pressures and the need for digital transformation," CEO Kendall Hunt said in a press release. "As a result, they are delaying the placement of orders."
Vasco believes these orders will eventually show up in future quarters, but it isn't projecting a quick rebound. In fact, executives scaled back their full-year sales guidance to $190 million from the $210 million they had last forecast. Earnings will take a hit from this decline as well, with operating income now seen coming in below the 11% that Vasco was targeting for the year.
Management promised more detail on profitability and operating trends when the company announces its full quarterly report on Oct. 27. Until then, investors will need to lower their expectations to account for Vasco's struggles in a European banking market that makes up the bulk of its business.