Home Depot’s rally: what’s needed to sustain the momentum

“If rates come down or [the] do-it-yourself market heats up, you’re going to have the number one stock,” Jim Cramer stated, referring to Home Depot.

The stock has seen a notable increase since the 10-year Treasury yield reached a two-decade high above 5.3% on October 5th, rising by over 25%. It’s currently on track for five consecutive weeks of gains, a streak not seen since November 2024 to December 2024.

Mortgage rates, which tend to follow bond market yields, reached 7.5% the week of October 14th, according to the Mortgage Bankers Association, a level not seen since November 2023. While rates have recently decreased, they remain a full percentage point higher than a year ago, impacting housing activity and impacting both renovations and new construction.

Home Depot’s management has focused on strategic acquisitions and maintaining strong same-store sales growth, outperforming rival Lowe’s. Cramer believes the election results could also lead to relief from tariffs, which have previously impacted the company.

“The working person’s been hurt by higher gasoline. The working person’s been hurt by tariffs, including many things that are bought at Home Depot,” he said. “That’s going to be over.”

While some tariffs were overturned earlier this year and refunds have been received, the impact on prices has been lasting. Home Depot CFO Richard McPhail noted in August that these refunds were used to offset rising costs. Rising oil prices, influenced by tensions in the Middle East, also pose a challenge. Cramer considers the situation with Iran a potential wildcard.

Jim Cramer and portfolio director Jeff Marks will discuss the market’s direction and their positions on all 31 Club holdings at the New York Stock Exchange on Friday at 10:30 a.m. ET.