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Stocks ended lower as a sales warning from Yahoo Inc. saw the Nasdaq Composite snap a seven-session winning streak. Fortunately, a sharp drop in oil prices helped the market recover from its lows. Additionally, a smaller than expected rise in producer prices for August eased inflation worries. However, another weak housing report raised new questions about the extent of the slowdown in the nation’s economy.

Today, the Dow Jones industrial average closed down 14.09 or 0.12% to 11,540.91, the broader Standard & Poor’s 500 index closed down 2.87 or 0.22% to 1.318.31, and the Nasdaq composite index closed down 13.38 or 0.6% to 2,222.37.

Market breadth was negative. On the New York Stock Exchanges, losers beat winners by 9 to 7 on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers by 18 to 11 on volume of 2.1 billion shares.

While the drop in oil prices is helping investors, nobody is willing to take a stand ahead of the Fed Meeting. Most analysts are expecting the Fed to pause in the tightening cycle for a second time in a row, following data reports showing that inflation is less of a threat and that economic growth is tamer. The latest producer price report also leaves many investors undecided on whether it points to an economy that is slowing down at a gradual pace or an economy where growth is coming to a grinding halt. The latest housing data only served to fuel this debate.

In data news, the producer prices rose 0.1% last month, against the expected 0.3% increase. The core rate dropped 0.4%, against the expected 0.2% gain. This benign inflation report was unexpected, and fits into the expectation that Fed will hold interest rates steady at 5.25% for the second straight meeting on Wednesday.

Housing industry has continued to ebb. Construction of new homes fell 6% to a seasonally adjusted annual rate of 1.665 million, against the expected decrease of 2.5%. Building permits fell 2.3% to a seasonally adjusted rate of 1.722 million. Permits are considered a leading indicator for the housing sector and the economy.

Shares of Yahoo Inc. fell more than 11% after the CFO warned that a slowdown in auto and financial advertising spending will crimp third-quarter sales. Stock of Yahoo closed down $3.20 or 10.9% to $25.82. The slow down is attributed to the softness in online advertising. The company expects revenue to be from $1.115 billion to $1.225 billion, against the expected $1.18 billion. As a reaction, shares of Google closed down $10.88 or 4% to $403.81.

Shares of Motorola closed down $0.02 to $24.93, after it stated that it would buy Symbol Technology for about $3.9 billion. Stock of Symbol closed up $0.08 to $14.75. Motorola shall pay $15 a share, for Symbol, which is a market leader in mobile-data computing and radio-frequency identification, or RFID, technology. Symbol is also known for its role in spearheading the development of barcode-scanning technology, which is especially popular in retail stores.

Shares of Target closed up $0.76 or 1.5% to $54.34, after raising its September sales forecast. The company is looking at same store sales to be 5% higher. However, the company did not offer any other information, such as whether apparel or grocery sales moved the mark or if higher transactions helped stalled traffic.

U.S. light crude oil for October delivery sank $2.14 to $61.66 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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