Home Depot, Zillow shares move higher after Fed's rate hold

Home improvement retailer Home Depot (HD) and real estate marketplace Zillow (Z, ZG) are getting a bump higher Wednesday in response to the cooling inflation data shown in May's CPI (Consumer Price Index) print and the Federal Reserve's decision to hold interest rates in June. Housing costs and shelter inflation remain sticky.

Market Domination Hosts Josh Lipton and Julie Hyman take a closer look at these stocks following Fed Chair Jerome Powell's press conference.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video Transcript

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Now shares of Zillow and Home Depot, both on the rise, comes after this morning's Consumer Price Index data coming in a little cooler than expected in hopes that rates are going down.

So that was really the name of the game here, Julie.

You just have this kind of these movies and these rate sensitive names, right?

So we mentioned digital real estate.

Zilla Zillow was one Redfin open door.

I saw all those guys moving earlier.

Zillow, we should note.

Also, by the way, director did disclose late yesterday 100 million in share purchases.

That never hurts, of course.

Also, some home improvement names, too, got to lift Home Depot lows.

Build first resources I saw was higher so far with, like basically anything at all that there was a perception that lower rates would potentially help them.

And I you know, it's interesting because we these stocks, are maintaining their gains.

Even after we heard from Jay Powell, he didn't seem to indicate that those lower rates are coming imminently right, and expectation is still not that they are coming.

In July, I was struck by what he said when he was asked about how inflation is affecting Americans and how the Fed is sort of weighing the costs of these rates, where they are versus the benefits that would come if they were cut.

And, he said, We want to make sure we're confident that inflation is moving back down to 2% because he says it pays benefits to Americans.

The whole economy, he says he wants, get back to where people don't have to think about inflation, right, that it's front and centre.

Um, and so it's interesting that we're not there yet that they you know, he he knows, he acknowledged.

People want those lower rates.

They want also lower inflation.

So and he kind of emphasised there, George is a good point.

He also talked about kind of pulled on that thread about how we gotta get this inflation down, particularly, he said, painful for lower income Americans, especially, uh, but your point, these continue to pop.

I'm just looking at, you know, the ETF that tracks the home of the XHB about 3.2% right now.

In many of the cases of the stocks that we just showed on the screen a few moments ago, I don't know if all of them, but most of them are down on the air going into today.

Zillow, for example, down 26% and even with today's gains, is still down on the year.

Home Depot down in the air so far down the air Builders first source down in the air.

So these are stocks that have really been suffering.

Um, as we have had, uh, what's been going on with the, uh, with rates?

And I was just eyeballing Zillow's shares versus Treasury yields because the common sense would be they would move inversely right when yields are higher.

There's a perception that the home building market is gonna be, um, hurt.

And that is what we've seen.

It's not as clear, quite as clear on that particular chart, but the there is a a sort of rough.

There.

You see it there as well.

A rough, inverse relationship, for sure