Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

The Home Depot, Inc. (HD), JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC): Interest Rates and Stocks Rise Ahead of Jobs Report

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

A day ahead of the all-important monthly jobs report, stocks and Treasuries are both rising as economic data continues to slowly improve. Today, ADP said 176,000 private-sector jobs were added in August, down from July’s 198,000 job gain. New unemployment claims also fell to 323,000 — the lowest reading since October 2007. We may not be gaining a lot of jobs, but people also aren’t losing the jobs they have.

Positive jobs data means that unless there’s terrible news about the labor market tomorrow, it’s likely that the Federal Reserve will begin slowing its asset purchase program later this month. That speculation has helped push the 10-year Treasury yield up to 2.98% today, which would be the highest close since July 2011. Tapering concerns would have sent the market into a frenzy a month ago, but the Dow Jones Industrial Average has actually risen marginally late in today’s trading session, and the S&P 500 is up a modest 0.12%. The end of tapering is driven by improving economic data, so stock investors in for the long haul should be happy about tapering at the end of the day.

The Home Depot, Inc. (NYSE:HD)

The rise in interest rates and a report from Freddie Mac saying that 30-year mortgage rates rose to 4.57% last week are helping push down shares of The Home Depot, Inc. (NYSE:HD) by 1.4% today. Rising mortgage rates will likely put a big damper on existing-home sales over the next six months, and that’s where The Home Depot, Inc. (NYSE:HD) can take advantage of sellers fixing up homes and buyers modifying homes to their liking. The good news is that rising rates won’t entirely kill the market, so The Home Depot, Inc. (NYSE:HD) is still a decent value at 14 times forward earnings and a 1.3% dividend yield.

On the flip side, big banks JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) are both up 0.7% because they will benefit from higher spreads on new loans. When long-term rates rise and short-term rates stay the same, banks can make more money on the spreads between those rates. The Federal Reserve has given no indication it will raise short-term rates and that should mean higher profits for megabanks’ mortgage units, provided volume doesn’t evaporate.

The article Interest Rates and Stocks Rise Ahead of Jobs Report originally appeared on and is written by Travis Hoium.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Home Depot. The Motley Fool owns shares of Bank of America and JPMorgan Chase.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.