What happened

Stanley Black & Decker (SWK 1.56%) released earnings that showed sales slowing, and results from one of the world's largest home improvement retailers only added to the gloom. Shares of Stanley Black & Decker fell 13.2% in May, according to data provided by S&P Global Market Intelligence, on investor uncertainty about what lies ahead.

So what

Stanley Black & Decker is one of the world's largest tool manufacturers and a longtime dividend stalwart, but the company is still subject to the swings of the broader economy. With interest rates up and the housing industry caught in limbo, demand for tools and construction equipment is currently not as strong as it had been.

In early May, Stanley reported a first-quarter loss of $0.41 on revenue of $3.93 billion. The loss was expected and actually was less than feared, but the revenue number missed the $4.01 billion consensus estimate. A year ago, Stanley earned $2.10 per share in the quarter on revenue of $4.45 billion.

The company expects its full-year earnings to come in between breakeven and $2. That leaves a lot of potential upside, or downside, to the consensus $0.93 per-share estimate.

Disappointing results from Home Depot barely a week later further dampened spirits surrounding home improvement and construction, helping to keep Stanley Black & Decker mired in a slump.

Now what

Stanley Black & Decker attributed the loss to "prioritizing 2023 inventory reduction and cash generation" but still sees big things up ahead.

"While the near-term demand environment remains dynamic, the long-term opportunity in our key markets remains compelling," CEO Donald Allan Jr. said in a statement. "We are making strategic investments behind our strong, iconic brands, innovation engine, electrification and commercial activation to position the business for sustainable growth and margin expansion."

Indeed, there is nothing wrong with Stanley Black & Decker. But there isn't much the company can do when momentum slows due to macroeconomic factors. It could be a choppy few months for the stock, but long-term holders have no reason to be concerned.