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Home Depot Doubts Could Ding Funds

Nearly 800 funds could feel the shock of big box retailer's warning.

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As if you needed more clues that the economy has slowed, retailing bellwether Home Depot (HD) said on Thursday it’s third quarter will be a fixer-upper and that the fourth quarter may need some work, too. Hundreds of funds could feel the knocks if the market punishes the home-improvement chain for the news. The stock was down nearly 25% in early trading.

Home Depot's warning, however, doesn't change the long-term prospects for the stock, said Morningstar.com stock analyst Mark Sellers. Investors shouldn't panic about their Home Depot shares or the close to 800 mutual funds that also own them.

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Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.