Surging home sales boost Home Depot earnings

Shares in Home Depot (HD), the U.S.'s biggest home-improvement retailer, fell 1.2% Tuesday despite the firm's earnings beating Wall Street expectations.

Home Depot's net income jumped 18%. The Atlanta-headquartered retailer raised its full-year earnings and revenue expectations.

"The second quarter results exceeded our expectations as our business benefited from a rebound in our seasonal categories, continued strength in the core of the store and the recovering housing market in the U.S.," said Frank Blake, chairman and chief executive, in a statement.

For the three months ended Aug. 4, Home Depot earned $1.8 billion, or $1.24 per share. That compares with $1.53 billion, or $1.01 a year ago. Revenue for the company climbed more than 9% to $22.52 billion, from $20.57 billion. Analysts expected earnings of $1.21 per share on revenue of $21.79 billion.

On Friday, investors will be watching for the July new home sales report. Builder confidence in July reached an eight-year high and has been trending up for the past two years.

Shares fell 92 cents to close Tuesday at $74.29.