Home Depot Builds Caution

Updated from 7:19 a.m. EDT

With a slowdown in the U.S. housing market at hand, Home Depot's (HD Quote) second-quarter results soothed investors' fears of broader trouble for the home-improvement chain. The company showed caution, though, in its forecasts for the rest of the year.

The retailer reported higher-than-expected earnings Tuesday and announced it will beef up efforts to fight off competitive threats. Investors, who have sent Home Depot's stock down more than 10% since the start of June, bid the shares up $1.19, or 3.6%, to $34.45 in recent trading.

The Atlanta-based company said it earned $1.86 billion, or 90 cents a share, for the quarter ended July 30, up from the year-ago $1.77 billion, or 83 cents a share. ...