Lowe's Follows Leader

Updated from 7:36 a.m. EST

The weak housing market continues to weigh on Lowe's(LOW Quote), which followed the tracks of larger rival Home Depot (HD Quote) in cutting its guidance for the full year as it battles lower demand for home-related goods.

The nation's No. 2 home improvement chain did manage to post third-quarter earnings that beat forecasts, though its sales missed estimates.

The lowered guidance wasn't a complete surprise, as Lowe's had warned in September that full-year earnings would be near the low end of its prior forecasts. Investors, expecting worse, sent shares higher Monday. The stock recently was up 45 cents, or 1.5%, to $30.93.

In addition to the slowing U.S. housing market, Lowe's said it has been hurt by deflation in certain commodity categories, and a tough comparison to last year's hurricane recovery and rebuilding efforts.

"We believe many external headwinds will exist through the balance of the year and the first half of fiscal 2007, but as we look to the future, we are confident that solid longer-term drivers of our industry remain," CEO Robert Niblock said in a statement, noting the company was seeing solid performance from its new stores.

Lowe's cautious statements follow similar sentiments last week from Home Depot, which reported a 3% drop in third-quarter profits and lowered its fourth-quarter forecast due to the housing market slowdown.