The Home Depot stock has led the Dow Jones Industrial Average higher following positive remarks from Federal Reserve Chair Jerome Powell about inflation. The DJIA and other major US indices have increased between 0.25% and 0.5%.
The Fed decided to maintain interest rates while indicating a potential for rate cuts by 50 basis points by year-end. Powell noted a cautious approach regarding inflation pressures, referencing the recent rise in consumer inflation expectations.
Home Depot Stock Performance
The Home Depot’s share price stabilised after a recent drop of over 11%. Concerns about tariffs imposed on imports from Canada, Mexico, and China could affect the company’s product sourcing.
Lumber, which contributed nearly 8% of revenue this year, is notably impacted, alongside significant flooring sales. While substitutes for Chinese appliances may alleviate price rises, ongoing tariff discussions could complicate matters further.
The stock is currently in the $340 range and needs to surpass $384 to alleviate investor concerns. Without changes to the tariff strategy, it may decline to previous support levels around $340 or $324. The stock’s bearish trend highlights the need for a stronger performance to signal recovery.
Powell’s comments reassured markets that rate reductions could be on the table, which lifted sentiment across equities. However, the caution around inflation expectations suggests that the central bank is keeping a close watch on consumer pricing trends. A more persistent bout of inflation could delay any policy shifts, raising questions about the timing of these adjustments. With rate cuts of 50 basis points projected by year-end, traders will need to remain attentive to any shifts in inflation data or employment figures that might force the central bank to reconsider its stance.
Trading Considerations
The recent rebound in stock price comes after a sharp fall, but concerns about tariffs remain an ongoing issue. The impact on sourcing is not just a hypothetical risk—materials like lumber and flooring already make up a noteworthy share of revenue, and unfavourable trade policy adjustments could dent margins further. If tariffs on key imports persist or intensify, cost structures could worsen, limiting the company’s ability to maintain pricing without affecting demand.
At the current level, the stock sits within a range that leaves little room for complacency. While breaking above $384 would provide relief, failure to do so could mean further selling pressure. A retest of prior support around $340 or even $324 is entirely reasonable if momentum does not shift in the right direction. There is a clearly defined bearish trend, so without a fundamental driver to push it higher, the stock risks sliding further, making future sessions particularly telling.
From a trading perspective, price action near these levels will be crucial. A decisive move above resistance would indicate renewed confidence, whereas failure to hold higher levels could trigger additional declines. Given that broader monetary policy expectations are supportive of equities but trade policy concerns remain unresolved, traders will have to weigh these opposing forces carefully.
