Rite Aid Continues Pullback; Home Depot Drives Dow

The stock market eked out small gains on Monday, as increasing violence in Iraq kept investors from getting too excited about a resurgent U.S. manufacturing sector. While May's manufacturing numbers -- industrial production rose 0.6% last month from the month before -- bode well for U.S. second-quarter GDP growth, the clashes in Iraq threaten to raise global oil prices and further destabilize the Middle East. Weighing these factors against one another, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) added 5 points, or less than 0.1%, to end at 16,781. Home Depot (NYSE: HD  ) finished as the Dow's strongest performer.

Investors sent shares of Home Depot 1.1% higher Monday after a popular gauge of homebuilder sentiment rose to its highest level since January. The National Association of Home Builders, or NAHB, housing market index, released monthly, clocked a 49 in June; a reading of 50 indicates neutral sentiment. The NAHB index measures three components: current new home sales, expected future new home sales, and traffic levels of potential new home buyers. Seeing that expected future sales, at a 59 reading, was the strongest part of the index, Wall Street couldn't help but imagine a bright future for Home Depot.

Source: Rite Aid website.

Shares of Rite Aid Corporation (NYSE: RAD  ) lost 3.1% today, as investors wait intently for the drugstore's quarterly earnings on Thursday. Rite Aid stock -- which had been on a remarkable run that sent shares from lows of $2.62 to a peak of $8.62 in the last year alone -- finally hit a speed bump in recent weeks, when the specter of shrinking margins and disappointing earnings spooked the market. For businesses with inherently slim margins, the smallest fluctuations in those margins can make a monumental impact on the bottom line. Consider Rite Aid's net profit margin, which stands at a meager 0.8%. If it could increase that number ever so slightly to 1%, profits would jump by 25%! You can imagine how falling margins at Rite Aid are cause for some concern.

Lastly, shares of 500.com Limited (NYSE: WBAI  ) shed 4.8% today. The company, an online "sports lottery service" out of China, operates in somewhat of a grey area, since gambling in China, outside of the island of Macau, is illegal. This issue has been raised previously, but 500.com has never strayed from its claim that it operates legally, under the approval and oversight of the Chinese government. While the website should see more action with the global fervor of the World Cup spiking interest, online Chinese lottery stocks aren't exactly an area people should be parking their retirement funds.

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