Home Depot Stock Up 25% Since October as Mortgage Rates Ease

Home Depot shares climbed 6.5% on Wednesday, marking a recovery that has pushed the stock up more than 25% since October 5.

The rally coincides with a drop in the 10-year Treasury yield, which recently hit a two-decade high above 5.3%. As bond yields fell, the 30-year fixed-rate mortgage, which peaked at 7.5% in the week of October 14, began to decline. According to the Mortgage Bankers Association, those peak rates had not been seen since November 2023.

The market reaction followed Tuesday's midterm elections, in which Democrats secured control of both the House and the Senate. Investors anticipate that the new legislative balance may lead to actions aimed at easing the housing affordability crisis. Simultaneously, oil prices dropped sharply on expectations that Middle East conflicts will not intensify, further reducing inflationary pressure.

Jim Cramer, whose charitable trust holds the stock, expressed optimism about the company's position. He stated on Wednesday, "If rates come down or [the] do-it-yourself market heats up, you're going to have the number one stock." Cramer also argued that the election results could lead to tariff relief, noting that working people have been hurt by higher gasoline costs and tariffs on goods sold at the retailer.

Chief Financial Officer Richard McPhail told investors on the August earnings call that refunds from overturned tariffs are being used to offset rising cost pressures. While the Supreme Court struck down most of President Donald Trump's tariffs earlier this year, the company noted that prices set after the levies were imposed are not expected to fall immediately.

Home Depot is on pace for a fifth consecutive positive week, which would be its longest winning streak since late 2024. The stock has struggled to break out of a pattern of lower highs and lower lows over the past year, though recent market moves suggest traders believe the election outcome may resolve diplomatic tensions with Iran.

Cramer and portfolio director Jeff Marks are scheduled to speak at the New York Stock Exchange on Friday. They will discuss the market outlook and the CNBC Investing Club's 31 holdings, including Home Depot, in a livestream beginning at 10:30 a.m. ET.