Intel Holds Its Ground as the Dow Slides
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
A government shutdown is only hours away, and Wall Street seems resigned to the fact that federal services won't be running at full speed tomorrow. Just after 2:30 p.m. EDT the Senate voted down a plan that could have averted a shutdown because it was tied to a one-year delay in Obamacare. Barring a last-minute deal tonight, the government will shut down nonessential services tomorrow. The market doesn't like what it sees, with the Dow Jones Industrial Average down 1.01% and the S&P500 off 0.78% with 20 minutes left in trading. However, it doesn't look like investors expect a long shutdown or a default on the nation's debt, or stocks would have been falling for weeks. This is a blip on the long-term radar unless Washington fails to act by the Oct. 17 deadline to increase the debt ceiling.
On a company level, Procter & Gamble is one of the Dow's biggest losers, falling 2.2% today. Competitor Unilever said sales growth would slow from 5% to between 3% and 3.5% in the third quarter. The company said weaker currencies would impact growth -- a downside of a stronger dollar. This will likely impact P&G as well, although I wouldn't be too alarmed today, because currencies ebb and flow; a weakness this quarter may turn into a strength in the next next.
One of the few Dow stocks resisting the market's drop today is Intel , which is down a modest 0.35%. The company's energy director, Hannes Schwaderer, said Intel plans to take a "significant chunk" of the smart-grid market for microprocessors, another growth avenue for the company. This follows an early move into wearable devices and a focus in lower-power-consumption smartphone and tablet chips at Intel. These new markets may turn around stagnant revenue and turn the chip giant into a growth company again. Schwaderer said he thinks the smart-grid microprocessor market could be $5 billion by the end of the decade, so significant market share would certainly help Intel.
I still think this is one of the best stocks on the Dow, and it's these kinds of growth opportunities that will turn this from a value stock to a growth stock in the future. While Intel might be behind on smartphones it's turning that loss into a chance to look forward as new markets emerge.
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Fool contributor Travis Hoium manages an account that owns shares of Intel. The Motley Fool recommends Intel and Procter & Gamble. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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