Home Depot Gives Stock Market a Boost
Better-than-expected earnings by Home Depot are seen as another signal that the housing market is recovering.
The share price for Home Depot (NYSEARCA:HD) surged in excess of 4 percent on Tuesday after the company reported net third-quarter earnings of $1.1 billion, or $0.74 per diluted share, representing a 23.3 percent increase from 
third quarter of 2011. The improved results were seen as yet another signal that the housing market is recovering.
As of 1:55 EST, the Dow Jones Industrial Average advanced by 38 points (0.30 percent) to 12,853. The S&P 500 Index climbed 0.40 percent to 1,385 – staying below its 50-day moving average of 1,432 and just above its 200-day moving average of 1,381 (NYSEARCA:SPY). After Monday’s break below its 200-day moving average following a triple top (see green bar on chart) there is a serious risk that the S&P 500 could make a further decline. (Chart courtesy of Stockcharts.com) The Nasdaq Composite slipped 0.04 percent to 2,903 (NASDAQ:QQQ). The Russell 2000 Index dipped 0.03 percent to 793 (NYSEARCA:IWM).
The “Dollar Bull” Index ETF (NYSEARCA:UUP) advanced by 1 cent (0.05 percent) to 22.20 as of 1:24 EST.
As of 1:10 EST, the S&P 500 Volatility Index – or VIX – declined 0.54 percent to 16.59, and the VIX Short-Term Futures ETN made a 0.98 percent decline to 34.45 (NYSEARCA:VXX). VIX ETFs Crater Despite Looming Fiscal Cliff
The major European stock indices made solid gains on Tuesday after Greece was granted a two-year extension by European Union finance ministers to comply with the deadline to meet its targeted primary budget surplus of 4.5 percent of GDP. Greek Finance Minister Yannis Stournaras reported that he met with European Union finance ministers and he expects that they will approve the next €31.5 billion bailout tranche to Greece at their November 20 meeting. The Euro STOXX 50 Index finished Tuesday’s trading session with a 0.79 percent advance to 2,493 (NYSEARCA:FEZ). Nevertheless, the Euro STOXX 50 remains below its 50-day moving average of 2,515. The FTSE 100 Index rose 0.33 percent to 5,786 (NYSEARCA:EWU). The German DAX Index dipped 0.01 percent to 7,169 (NYSEARCA:EWG). France’s CAC 40 Index climbed 0.56 percent to 3,430 (NYSEARCA:EWQ). Spain’s IBEX 35 Index surged 1.66 percent to 7,693 (NYSEARCA:EWP). Italy’s FTSE MIB Index jumped 1.40 percent to 15,333 (NYSEARCA:EWI).
As of 1:34 EST, the euro declined 0.02 percent against the dollar, trading at $1.2708 (NYSEARCA:FXE).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil declined by $1.14 (1.05 percent) to $107.01/bbl. (NYSEARCA:BNO, NYSEARCA:USO). IEA World Energy Outlook Sees U.S. as Number One Oil Source
December Gold futures advanced by $3.20 (0.18 percent) to $1,727.70 per ounce (NYSEARCA:GLD). Gold ETFs Stay Flat with Equity Markets
ETF Summary:
SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) +0.22% as Home Depot’s upbeat earnings report is seen as a signal that the housing market is recovering.
SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ) +0.13% making a less-significant advance than the Euro STOXX 50 Index, as investors await a decision from European Union finance ministers on the approval of the next €31.5 billion bailout tranche to Greece.
PowerShares Dynamic Building and Construction ETF (NYSEARCA:PKB) +0.31% following the better-than-expected earnings report from Home Depot, which represents approximately 5 percent of the weight of PKB.
iShares Barclays 20+ Year Treasury Bond Fund (NYSEARCA:TLT) +0.25% recovering from a morning decline as concern about the fiscal cliff reduces investors’ appetite for risk, making the safe haven of government bonds more attractive. Learn More About iShares
SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) +0.37% as enthusiasm about a housing market recovery was fueled by a better-than-expected earnings report from Home Depot.
Bottom line: The power of a single earnings report was demonstrated on Tuesday after Home Depot’s quarterly earnings, which represented a 23-percent increase from third quarter of 2011, boosted investor enthusiasm as the result was seen as a signal of the housing market recovery.
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