Home Depot's Earnings Beat Sparks Consumer Stocks Rally

US consumer stocks received a late boost after Home Depot's quarterly earnings beat expectations and maintained its full-year forecast. The home improvement giant saw customers opting for smaller, lower-cost projects rather than major renovations.

The results fit the picture of consumers being pickier about their spending. Redbook reported that US same-store sales rose 7.6% year-on-year in the week ended August 15th, a slight slowdown from the previous week. Home Depot's stock gained only 0.4%, reflecting this trend.

This mix has implications for markets. The Consumer Staples Select Sector SPDR Fund ETF (XLP) rose 1.3% while the Consumer Discretionary Select Sector SPDR Fund ETF (XLY) was up just 0.1%. This divergence highlights where investors see steadier earnings, favoring consumer staples over discretionary brands.