Home Depot Stock Jumps 25% Since October as Rates and Tariffs Ease

Since the 10-year Treasury yield peaked above 5.3% on October 5, Home Depot shares have climbed more than 25%. The company is on track for a fifth consecutive week of gains, marking its longest winning streak since late 2024. This recovery follows a prolonged slump for the home improvement retailer.

Stocks rose 6.5% on Wednesday after Democrats secured control of both the House and the Senate in Tuesday's midterm elections. Traders anticipate that this shift in power will prompt Washington to address the housing affordability crisis. Simultaneously, crude oil prices dropped sharply on expectations that the Middle East conflict will not intensify, causing bond yields to decline.

The 10-year yield serves as a benchmark for mortgage rates. The 30-year fixed-rate mortgage hit 7.5% during the week of October 14, according to the Mortgage Bankers Association. That level had not been reached since November 2023. Although rates have fallen for two straight weeks, they remain one percentage point higher than they were a year ago, continuing to weigh on renovation and new construction activity.

Jim Cramer, whose charitable trust holds Home Depot stock, expressed confidence in the company's future. "If rates come down or [the] do-it-yourself market heats up, you're going to have the number one stock," Cramer said Wednesday. He argued that the election outcome could lead to tariff relief, noting that working people have been hurt by higher gasoline and tariff costs on items sold at the retailer.

The Supreme Court overturned most of President Donald Trump's tariffs earlier this year, and companies like Home Depot have received refunds. Chief Financial Officer Richard McPhail stated in August that these funds are being used to offset unplanned cost pressures. However, prices that rose after the original levies are not expected to drop quickly. Home Depot has faced lower highs and lower lows over the past year, and previous signals of rate cooperation have faded.

Cramer and portfolio director Jeff Marks will discuss the market outlook and the club's 31 holdings, including Home Depot, at the New York Stock Exchange on Friday. The event is part of the CNBC Investing Club's annual meeting, with the livestream beginning at 10:30 a.m. ET.