Why Lowe's (LOW) Stock Is Trading Up Today

What Happened?

Shares of home improvement retailer Lowe’s (NYSE:LOW) jumped 3.2% in the afternoon session after comments from a key Federal Reserve official boosted investor optimism for a potential interest rate cut. 

New York Federal Reserve President John Williams, a voting member of the rate-setting committee, suggested he sees room for "further policy easing," which sent a strong signal to the markets. Following his remarks, the probability of a December rate cut, as measured by the CME FedWatch Tool, surged from 39% to 71%. Lower interest rates can stimulate the economy by making borrowing cheaper for both consumers and businesses, which often translates to increased consumer spending. This prospect is outweighing recent reports of lower consumer confidence, as investors bet that a more accommodative Fed policy will support retailers through the holiday season.

The shares closed the day at $233.98, up 2.4% from previous close.

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What Is The Market Telling Us

Lowe’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 5.2% on the news that the company reported third-quarter earnings that beat analyst profit expectations and raised its full-year sales forecast, despite a slight revenue miss and lowered earnings guidance. 

The home improvement retailer posted adjusted earnings of $3.06 per share, surpassing the consensus estimate of $2.95. Total sales for the quarter were $20.81 billion, a 3.2% year-over-year increase, but just shy of Wall Street's expectation of $20.87 billion. Same-store sales, a key industry metric, were flat compared to the same period last year. Looking ahead, Lowe's increased its total sales outlook for the full year to $86 billion at the midpoint, but lowered its forecast for adjusted earnings to approximately $12.25 per share. The market's positive reaction suggested investors focused on the profit beat and higher sales guidance, weighing them more heavily than the mixed outlook.

Lowe's is down 4.5% since the beginning of the year, and at $235.95 per share, it is trading 14.3% below its 52-week high of $275.32 from November 2024. Investors who bought $1,000 worth of Lowe’s shares 5 years ago would now be looking at an investment worth $1,535.

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