Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Stocks remain at record highs, with the Dow Jones Industrials (DJINDICES:^DJI) climbing 46 points as of 12:20 p.m. EST to top the 16,000 level for the first time ever. A big part of the Dow's bull-market run over the past four years has come from Home Depot (NYSE:HD), and the home-improvement retailer will give its latest reading on the state of U.S. housing with its quarterly earnings report tomorrow. Given the impact of the housing market on the entire economy, Home Depot's results will have implications for the entire economy and could therefore have a big impact on how the Dow moves Tuesday.
Home Depot will release last quarter's numbers just after 6 a.m. EST tomorrow, before the market opens. It will follow the release with a conference call scheduled to begin at 9 a.m. EST.
Home Depot has been a huge leader since the Dow's 2009 lows, with its stock more than quadrupling in that four-and-a-half-year span. The fallout from the housing bust was predictably difficult for the retail chain, but Home Depot managed to recover even in a stagnant housing market by supporting renovation and remodeling efforts for customers' existing homes. It even managed to outpace rival Lowe's (NYSE:LOW) during much of that time, with Home Depot management doing a superior job in holding its own even through the toughest times. As the market hit bottom and started to rebound, Home Depot also capitalized on those seeking to make their properties as attractive as possible to potential buyers. Even though Lowe's has joined in those gains, it still lags behind its competitor in longer-term returns.
More recently, concerns about interest rates have halted Home Depot's rise. Traditionally, customers have used proceeds from mortgage refinancing as a pot of cash for remodeling projects, but the bottoming of interest rates earlier this year has dramatically reduced refinancing activity. Fellow Dow component JPMorgan Chase (NYSE:JPM) and other banks have seen the impact of falling mortgage volume on their overall businesses. Home Depot is just one example of the collateral impact that rates could have in the years to come if the Federal Reserve starts easing back on its stimulative bond-buying activity.
Yet Fed chair nominee Janet Yellen did a good job of putting those fears to rest last week, with her Senate confirmation hearing offering an opportunity to stress her insistence on keeping rates low until the economy truly rebounds convincingly. If the broader bond market takes Yellen's words to heart, it could result in another leg down for rates and more opportunities for Home Depot to cash in.
Home Depot has supported the Dow's moves for years, and the news it gives investors tomorrow could once again move the average. For the Dow more broadly, signs that the housing industry is continuing to support the economy could keep the record-setting trend going throughout the average.
Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Home Depot. The Motley Fool owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.