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Triple-Digit Dow Jones Rise Can't Do Much for Home Depot

By Dan Carroll – Mar 17, 2014 at 2:30PM

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Caterpillar gains 0.4% after strong manufacturing data.

Stocks started out the day in stride and haven't looked back in what turned out to be a rosy session of trading for investors and the Dow Jones Industrial Average (^DJI 0.23%). Shrugging off announced EU and U.S. sanctions against Russia after Sunday's secession vote in Crimea, the blue-chip index has gained more than 193 points as of 2:30 p.m. EDT. Home Depot (HD 0.46%)has been up and down throughout the day on a bit of downbeat economic data. Let's catch up on what you need to know.

Industrial production rises in February
U.S. industrial production pushed higher by 0.6% last month, according to Federal Reserve data released this morning, with a year-over-year gain of a strong 2.8%. Manufacturing output gained 0.8% in February as the sector managed to beat the worst of the winter weather; and in a surprising turn, mining output gained 0.3% for the month. The mining industry has been one of the recession's biggest casualties within the industrial sector over the past half-decade, so keep an eye on whether that uptick can hold.

That's especially true for investors in Caterpillar (CAT -0.23%), as the Dow's industrial leader hopes mining can turn around soon to light a fire under its sluggish heavy-equipment sales. Caterpillar's stock is up just 0.43% today despite the Federal Reserve's announcement, but with the world economy slowly gaining traction, this company wants industrial output to pick up in the coming months and quarters.

That won't happen without continued progress in the global economy -- especially in top markets such as the U.S. and China. The latter has had trouble sustaining much economic and production momentum at all lately. Caterpillar's resource industries segment slipped a painful 37% in sales last year. Mining is a cyclical industry, so investors likely will need to stay patient as the recovery continues.

New data shows that homebuilder confidence gained slightly in March, but a reading of 47 still lies three full percentage points before the neutral score of 50 that shows homeuilders as neither pessimistic nor optimistic. Despite home prices picking up speed in the early year, Home Depot's stock has struggled: Shares of the home-improvement retailer have lost more than 3% year to date; they were up 0.26% as of 2:30 p.m. EDT. It's no help to investors that rival Lowe's outperformed the company in the most recent quarter, closing the gap between Home Depot and the No. 2 competitor in the industry. However, if the weather picks up, and with lending to prospective homeowners slowly but surely growing, Home Depot likely won't be down for investors for long. A little patience with this stock should go a long way.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Home Depot. 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.

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