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Stocks closed lower on the day and the week. Markets were pressured by concern that the economy could be entering a major slowdown and about the potential impact of a congressional probe into Hewlett-Packard Co. The losses have been a major disappointment to many investors; as many analysts were predicting new record highs for the Dow Jones Industrials and the S&P 500.

Today, the Dow Jones industrial average closed down 25.13 or 0.22% to 11,508.10, the Standard & Poor’s 500 lost 3.25 or 0.25% to 1.314.78, and the Nasdaq composite index closed down 18.82 or 0.84% to 2,218.93. For the week, the Dow lost 0.5%, S&P 500 fell 0.4% and the Nasdaq gave up 0.7%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.43 billion shares. On the Nasdaq, decliners beat advancers almost 5 to 2 on volume of 1.67 billion shares.

The weak reading on manufacturing in the Philadelphia area have sparked worries about the economy, and has given investors a good reason to back track after the recent rally. Stocks have rallied over the last few weeks on lower oil prices, a belief that the economy is heading for a slowdown, not a recession and relief that the Federal Reserve Board seems to be set to keep interest rates unchanged for now. The news that revives the threat of the economy heading into recession, rather than a so-called ’soft landing, has got investors worried.’ Additionally, corporate news including Boston Scientifics’ warning and the continued overhang of Hewlett-Packard, has not been helping matters.

Shares of Boston Scientific closed down $1.56 or 9.2% to $14.80, after warning that third-quarter sales and earnings will miss forecasts due to weakness across most of its businesses. The medical device maker also warned that sales of its top-selling drug-coated stent will fall from last quarter and miss estimates.

Stock of KB Home closed up $1.10 to $44.15, after reporting quarterly revenue that rose from a year earlier and topped estimates. However, home sales that slumped from the prior year. The company did not release quarterly earnings, due to an ongoing internal probe of its stock option grants. The company however stated that a difficult market was unlikely to improve in the future.

Shares of Nike Inc. moved up $3.84 or 4.5% to $86.30, after it reported quarterly earnings that declined less than expected. While its earnings that fell from a year earlier, they nonetheless beat estimates.

Hewlett-Packard managed to close up 24 cents at $35.11. Its CEO Mark Hurd is to testify before a congressional committee next week over the company’s “pretexting” scandal. Additionally, the SEC has requested records and information related to the resignation of a board member.

U.S. light crude oil for November delivery fell $1.04 to $60.55 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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