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Stocks closed lower after weaker than expected results from home improvement retailer Lowe’s Cos. triggered concern about economic growth. Additionally, Iran’s defiant stance over its nuclear activities boosted oil prices. Nasdaq was hit the hardest as investors bailed out of some of last week’s biggest winners.

Today, the Dow Jones industrial average closed down 36.42 or 0.32% to 11,345.05, the broader Standard & Poor’s 500 index closed down 4.78 or 0.37% to 1,297.52, and the Nasdaq composite index closed down 16.20 or 0.75% to 2,147.75.
Market breadth was negative, and volume was moderate. On the New York Stock Exchange, losers topped winners by nearly 19 to 13 as 1.11 billion shares changed hands. On the Nasdaq, decliners topped advancers by almost 2 to 1 as 1.34 billion shares changed hands.

The fact that the major averages closed well off their intraday lows, indicates where the market is going the rest of the week. While some sort of consolidation is on the cards, there do not appear to be any significant problems for the market right now. The major worry right now is the belligerent attitude of Iran and the revived worries about its nuclear program. The answer to how much will growth slow, would be available in the slew of reports expected next week.

Shares of Lowe’s Cos. closed down $1.17 or 4% to $28.35, after reporting quarterly earnings that rose from a year earlier but were just short of expectations. The company also issued a full-year earnings growth forecast that is short of estimates. The company’s disappointing results and outlook had investors worried about the outlook for the home-improvement sector as a whole, in this period of slowing economic growth.

Shares of Gold Kist Inc. soared 47% to $19.02 as the poultry producer said it would consider a $1 billion plus the assumption of $144 million -debt offer from Pilgrim’s Pride Corp. to acquire the company. Gold Kist said it has already rejected two offers from Pilgrim’s Pride since February. Stock of Pilgrim’s Pride closed up 5.6% at $24.97.This represents a premium of around 55% over Gold Kist’s closing stock price. Pilgrim Pride opines that the acquisition of Gold Kist would add to its earnings.

Ford Motor Co.’s shares closed down $0.53 or 6.6% to $7.47, as brokerage Credit Suisse First Boston downgraded it to “under perform” from “neutral”. This is a reaction to the auto maker slashing its fourth-quarter production plans by 21%, particularly in the pickup and SUV segments. This has prompted speculation regarding the state of Ford’s “Way Forward” restructuring plans as well as the future of its earnings.

Shares of SanDisk Corp. closed up $0.22 to $51.39, after introducing a new digital music player that stores twice as many songs as Apple’s iPod Nano for almost the same price. Additionally, it cut the cost for Sansa players with two, four and six gigabytes of storage by as much as 30% ahead of the holiday shopping season. This led stock of Apple to closed down $1.35 or 2% to $66.56.

U.S. light crude oil for September delivery rose $1.31 to settle at $72.45 a barrel on the New York Mercantile Exchange. Crude-oil futures rose on Iran’s refusal to bow to international pressure over its nuclear activities. Iran’s supreme leader Ayatollah Ali Khamenei said that Tehran will continue to pursue nuclear technology, despite a U.N. Security Council deadline to suspend uranium enrichment. It also turned away U.N. inspectors wanting to examine its underground nuclear site in an apparent violation of the Nuclear Nonproliferation Treaty.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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