Home Depot shares are displaying indicators of life as optimism builds for an rate of interest minimize at subsequent month’s Federal Reserve assembly. The subsequent take a look at is earnings. The Club stock, which is without doubt one of the 30 names that make up the Dow Jones Industrial Average , is having its greatest month of the 12 months, even with Monday’s greater than 1% slide. Tuesday’s earnings report earlier than the opening bell, nevertheless, will highlight the retailer’s precise enterprise efficiency and might decide the place shares go from right here. They have gained almost 7.5% up to now in August. “Home Depot, the company, is not doing well. Home Depot, the stock is on fire,” Jim Cramer stated throughout our August Monthly Meeting final week. “It’s a stock that needs lower rates,” Jim added, to carry down charges on mortgages and residence fairness loans. HD YTD mountain Home Depot YTD And, decrease charges are, certainly, what the market expects from the Fed, with a greater than 80% probability of a September minimize, in line with the CME FedWatch device , and at the very least another by year-end. Mortgage charges, which have adopted the 10-year Treasury yield south since late May, hit their lowest ranges since late October 2024. As of final Thursday, the 30-year fixed-rate mortgage was 6.58%, in line with Freddie Mac , the Federal Home Loan Mortgage Corporation. Below 6.5% for a 30-year has traditionally been seen as a stage that spurs housing exercise, which Home Depot wants as a provider to homebuilders, contractors, and owners doing their very own renovation tasks. “We’ve seen the last couple of weeks, as rate cut odds improve, what could happen,” stated Jeff Marks, director of portfolio evaluation for the Club. The actual property market has been stalled because of these excessive residence costs and elevated mortgage charges. The latter is very punitive as a result of so many individuals secured super-low charges throughout Covid, that are retaining them put. During sluggish exercise from do-it-yourself prospects, Home Depot has been taking steps to bolster its enterprise aimed toward professionals. Last 12 months, Home Depot acquired SRS Distribution, a number one provider of roofing and constructing supplies, in an $18.25 billion deal. The residence enchancment big then doubled down this 12 months, with a profitable $4.3 billion bid to accumulate GMS again in June. “We believe the SRS platform has established a firm foundation for capitalizing on Complex Pro that is performing well,” wrote Stifel analysts in a notice to purchasers Sunday. The complicated professional section within the residence enchancment trade refers to large-scale tasks dealt with by contractors. Analysts added, “We view the potential GMS acquisition positively with modest synergy potential with HD leveraging its financial strength to invest behind favorable long-term construction trends amid difficult industry conditions.” In addition to listening for any additional particulars on the GMS transaction and the SRS integration, traders on Tuesday will get a take a look at Home Depot’s spring and early summer season gross sales — a interval that Jim has referred to as Home Depot’s Christmas . As my colleague Kevin Stankiewicz wrote in an earnings preview over the weekend, “The market is looking for a companywide same-store sales increase of 1.3% in the July quarter, according to FactSet. That would mark a significant acceleration from the 0.3% drop seen in the February-to-April period. Investors also will be looking for any tariff-related hit to margins after executives said in May they expected to ‘generally maintain’ current prices.” Bottom line While inspired by Home Depot’s value motion these days, the stock is coming into Tuesday’s earnings print sizzling, which Jim has typically stated makes him cautious. “It’s such a hard stock to own because we’re playing rates. We’re not playing the business,” he added. We might get a touch on charges earlier than the Fed’s assembly subsequent month. On Friday, Fed chief Jerome Powell is ready to handle the central financial institution’s annual confab in Jackson Hole, Wyoming. (Jim Cramer’s Charitable Trust is lengthy HD. See right here for a full checklist of the shares.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll obtain a commerce alert earlier than Jim makes a commerce. 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