The Dow Jones Industrial Average (DJINDICES:^DJI) was down 0.8% at 12:10 p.m. EDT Friday, underperforming the other major indexes. U.S. consumer spending dropped 13.6% in April, worse than economists were expecting, even as incomes rose thanks to trillions of dollars of stimulus spending.

Shares of Cisco Systems (NASDAQ:CSCO) and Home Depot (NYSE:HD) managed to buck the trend. Cisco stock rose after the company announced its intent to acquire a cloud software company, and Home Depot stock came close to carving out a new 52-week high.

A cloud.

Image source: Getty Images.

Cisco confirms a cloud acquisition

Networking hardware giant Cisco has been transforming itself from a seller of hardware to a seller of solutions. Those solutions increasingly involve software, and Cisco has made a slew of software acquisitions in recent years to support this strategy.

On Thursday, it announced its intent to acquire ThousandEyes, a privately held internet and cloud intelligence platform company based in San Francisco. Cisco didn't reveal how much it will pay, but the price tag is reportedly around $1 billion.

This is a significant acquisition, but nowhere near as big as some of Cisco's other recent deals. One example: It paid a whopping $3.7 billion in 2017 for AppDynamics.

Cisco will integrate ThousandEyes' capabilities into AppDynamics as well as its enterprise networking and cloud portfolio. "The combination of Cisco and ThousandEyes will enable deeper and broader visibility to pinpoint deficiencies and improve the network and application performance across all networks," said Todd Nightingale, general manager of Cisco's enterprise networking and cloud business. "This will give customers end-to-end visibility when accessing cloud applications, and Internet Intelligence will improve networking reliability and the overall application experience."

Cisco expects the deal to close before the end of its fiscal first quarter. ThousandEyes won't contribute much revenue at first; the company disclosed its customer contractual commitments for the fiscal year that ended in January totaled roughly $100 million. But that number grew by around 80% from the previous year, and growth could accelerate once ThousandEyes is part of Cisco.

The stock was up about 0.4% by early Friday afternoon. Shares remain down 21% from their 52-week high.

Home Depot is close to a 52-week high

With the U.S. almost certainly in a recession created by the pandemic and the associated stay-at-home orders, there's an immense amount of uncertainty surrounding consumer demand in the coming months.

One area where consumers have been spending freely so far has been home improvement. Home Depot reported a solid 7.5% increase in U.S. comparable-store sales for the first quarter, which ended on May 3, a far cry from the dismal sales results offered by many other retailers.

Home Depot said that the strong sales trends had continued into the first two weeks of the second quarter, but the retailer pulled its 2020 guidance due to uncertainty. The durability of this pandemic-driven surge in spending is unclear.

Investors are clearly happy with how Home Depot is navigating this crisis. The stock was up 0.9% by early Friday afternoon, bringing it tantalizingly close to its 52-week high. It will take an additional 2% gain for shares of Home Depot to carve out a new 52-week high.

The stock could run into some turbulence later this year if the current weakness in consumer spending spreads to categories that have so far been largely immune. Home improvement projects may take a backseat to other demands for many if the recession lingers. Home Depot investors are celebrating now, but the retailer will face unprecedented uncertainty in the months ahead.