Dow Jones plummet hurts Home Depot stock

Amid Middle East violence and the bombing of Navy destroyer USS Cole, the Dow Jones Industrial Average plummeted almost 400 points yesterday in the fifth-biggest point drop in history. Analysts pointed to turmoil abroad as the cause, but Thursday's stock activity continued a month-long slide in stock prices.\nHome Depot was the Dow's biggest loser, falling $14.06 or 29 percent, to a new year-low of $35.13. Thursday, the company announced in a report it would not be making its third-quarter earnings estimates of 5 to 7 percent from the same time last year. Earnings per share were $0.28, or approximately a 4 percent increase.\nHome Depot spokesperson Jerry Shields said the company's losses today were hard to definitively attribute.\n"The reaction is not a surprise," he said. "To what degree it is a compound of (the events in the Mideast) and our announcement, no one knows."\nIn its press release issued early Thursday morning, Home Depot pointed to a deflation in lumber and building materials retail pricing for their slowed sales trends, but President and Chief Executive Officer Arthur M. Blank remained optimistic.\n"The company's rates of profitability and return on capital are continuing at very strong levels," he said. "The outlook for growth in the home improvement industry remains strong, despite the deflationary lumber and building material environment." \n"We're considering this a temporary setback," Shields said. "We expect by early next year to be back on a 22 to 25 percent earnings growth rate."\nOther blue chip stocks followed Home Depot's tumble -- Wal-Mart, Lowe's and Staples each fell several percentage points. Overall, the Dow Jones fell 3.6 percent, putting it outside the top percentage drops in history. \nOil prices shot skyward amidst the Dow Jones' downward spiral. Prices jumped to $37 a barrel -- just 80 cents shy of its 10-year high. They closed at $36.06, up $2.81.\n"What we saw here is fear, pure and simple," said Phil Flynn, vice president and senior energy analyst at Alaron Trading Corp. in Chicago. "The market just realized how dangerous the situation in the Middle East is."\nAssociate professor of finance Craig Holden said Thursday's drop was not necessarily caused by the violence overseas.\n"Stock markets move without significant events," he said. "One study was done of the largest drops and increases in the 20th century, and in 80 percent you couldn't identify a major event as a cause."\nBut some market watchers said today's activities could be a direct result of the Mideast tumult.\n"In an already nervous market -- this is all we didn't need," said Al Goldman, an analyst with A.G. Edwards & Sons Inc. in St. Louis. \n"A terrorist attack, increased hostilities in the Middle East and a spike in oil prices -- shake it all up and you get blind dumping of stocks." \nThe Associated Press contributed to this story.