In general today, the markets closed flat. When the closing bell rang, the Dow Jones Industrial Average (DJINDICES: ^DJI ) sat lower by 9 points, or 0.06%, at 15,238, while the S&P 500 (SNPINDEX: ^GSPC ) was down 0.03% and the Nasdaq was higher by 0.13%.
The markets would have closed much lower today, but the credit rating agency Standard & Poor's announced that it was increasing the U.S.' debt rating from AA+ negative to AA+ stable this morning. This is a positive move that the U.S. economy is recovering and that the government is in a much better place financially than it was just a few years ago.
But even though the markets as a whole were flat, a few Dow components moved substantially lower today.
Shares of Disney (NYSE: DIS ) closed lower by 1.57%. One likely reason for the decline is the weakening Chinese economy. While there was no specific news about the world's second-largest economy, Disney CEO Bob Iger did announce that Disney's newest park, which will be in China, will incorporate Chinese culture within the park's theme. This announcement doesn't really change any of the material aspects of the company, but it surely brought investors' attention back to the fact that it is moving into rough waters in China. Not only is the economy slowing, but Disney is moving into an unproven market. Other U.S. companies have struggled to gain momentum in China and eventually pulled out of the country. Building a new park is a huge expense for Disney and one that would hurt shares if it doesn't pan out.
One such company that's been in China and left is the Home Depot (NYSE: HD ) . It had a number of stores around the country, but the "Doing it Yourself"concept didn't fit into the Chinese culture.
Shares of the home-improvement store also ended the day lower by 1.28% after some disappointing growth prospects were laid out by its management today. Home Depot CEO Frank Blake and CFO Carol Tome held a breakfast meeting with analysts this morning and said that while the U.S. housing market is recovering nicely, growth from new markets will likely be slow. We know the company is pulling out of China, and management said it has no interest in Europe while Central and South America don't likely have scalable opportunities that would help offset the costs of doing business in big markets like Brazil. Even in Canada, the company is only likely able to add two to three stores this year. But even Mexico's 101 stores, which will likely be increased to around 125 locations sometime soon, and the increase in sales due to a better housing market, isn't enough growth to appease everyone on Wall Street, hence the sell-off today.
Lastly, shares of Wal-Mart (NYSE: WMT ) fell by 0.76% after the results from its proxy vote, which was held on Friday, were released. While all 14 board members were reelected, some of the big players received double-digit votes against them being reelected as the company continues to work through the overseas bribery allegations. Some 12.1% of the votes cast were against CEO Mike Duke, which was slightly better than last year's 13.1% against him. Meanwhile, Chairman Robson Walton, son of founder Sam Walton, and former CEO Scott Lee received 10% and 8% votes, respectively, to be ousted. The large number of votes against each important member is a sign that a large number of shareholders don't agree with the direction the company is going.
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