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Dow Slumps, 1 Company Drags an Entire Industry Lower Today

By John Divine – Jul 10, 2014 at 6:17PM

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Home Depot, Tile Shop Holdings, and Lumber Liquidators all bite the dust on Thursday.

Down at one point by 180 points, the Dow Jones Industrial Average (^DJI 1.00%) rallied from its morning lows, but the comeback still wasn't enough to put the index in the black on Thursday. Fears that the woes of a troubled Portuguese lender could ripple throughout the continent sent European stocks spiraling lower today, causing Wall Street to take notice. The Dow finished with losses of 70 points, or 0.4%, ending at 16,915.

Home Depot (HD 0.90%) drove the Dow's losses on Thursday, shedding 1.7%, and finishing as the most severe blue-chip decliner of the day. The home-improvement retailer fell after concerns arose about the strength of the housing market's recovery. Deutsche Bank cut second-quarter earnings-per-share, or EPS, estimates slightly, from $1.45 per share to $1.44 per share. Home Depot has proven to be a conservative, yet profitable, way to play the rebound in the real estate market; the stock has soared more than 250% in five years as home prices recovered from crisis-level lows.

Lumber Liquidators investors weren't as happy as this young chap today. Image Source: Lumber Liquidators

Interestingly enough, Home Depot's losses today were more a result of Lumber Liquidators' (LL -0.85%) incorrigibly awful second quarter than anything else. Lumber Liquidators -- a hardwood-flooring retailer -- issued worrisome warnings to shareholders today, telling them, in essence, that its second-quarter results would be abysmal. Traffic fell off, same-store sales slumped 7.1%, and management guided for EPS around $0.60 in the quarter against expectations for $0.90. Shares cratered, plunging 21.5% on the news, and dragging respectable retailers in its industry, like Home Depot, lower as a result.

Shares of Tile Shop Holdings (TTSH -1.30%), for instance, were also dragged down by Lumber Liquidators' ugly performance today as the tile retailer caught heat from Wall Street. Credit Suisse went so far as to punish Tile Shop's earnings forecasts, reasoning that if the flooring market was soft across the board last quarter, then Tile Shop is also in for some disappointing results. Tile Shop stock slumped 9.3% as investors feared a same-store sales decline in the first quarter will be followed by another lousy showing in the second quarter.

John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Home Depot, Lumber Liquidators, and Tile Shop Holdings. The Motley Fool owns shares of Lumber Liquidators and Tile Shop Holdings. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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