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Home Depot Results Send Stocks Lower

14th Nov 2006, 18:04 GMT

Wall Street retreated Tuesday after Home Depot Inc.'s weak earnings offset economic reports that signaled inflation is slowing and consumer spending is stronger than anticipated. Investors sifted through mixed retail sales and profit reports, trying to gauge consumer sentiment heading into the holiday shopping season. The reports showed strength in discount retailers such as Wal-Mart Stores Inc. and Target Corp., but the sluggish housing market dampened results from Home Depot Inc. and raised concerns about the toll that slowing home sales is taking on other industries. But a stock market worried about rising interest rates were heartened by the Labor Department's report that wholesale inflation as measured by the Producer Price Index dropped by 1.6 percent last month following a 1.3 percent slide in September. Plunging energy prices were behind the declines. With crude oil prices down about 25 percent since mid-July, lower gasoline prices have boosted consumer spending. The Commerce Department said retail sales fell 0.2 percent last month, less than analysts predicted due to a rise in auto sales. In the first hour of trading, the Dow Jones industrial average fell 36.66, or 0.3 percent, to 12,095.22. Broader stock indicators also fell. The Standard & Poor's 500 index fell 4.42, or 0.32 percent, to 1,380.00, and the Nasdaq composite index fell 10.56, or 0.44 percent, to 2,395.82. Bonds rose on the inflation news, with the yield on the benchmark 10-year Treasury note falling to 4.56 percent from 4.59 percent late Monday. The dollar rose against other major currencies, while gold prices rose. Retailers are in the process of reporting their third quarter results. Wal-Mart rose $1.36, or 2.9 percent, to $47.68, after reporting third-quarter earnings rose 11.5 percent despite weak growth in U.S. sales. The world's largest discount retailer promised its most aggressive holiday discounts ever to fuel year-end business. Target rose 48 cents to $58.24,...

View full story at business.newsfactor.com

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