Why is Home Depot stock gaining today?

Home Depot's stock is gaining 0.7% mid-day after the company reported a strong fiscal second-quarter earnings beat, surpassing analyst expectations on both earnings per share and revenue. Adjusted earnings came in at $4.92 per share, well above the estimated $4.73, while revenue totaled $47.86 billion, exceeding the consensus estimate of around $47.27 billion.

Comparable store sales rose 1.7% companywide, the highest quarterly comparable sales growth since late 2022, with U.S. comparable stores up 1.3% and online sales climbing 11%, marking the fifth consecutive quarter of double-digit digital growth. Management reaffirmed its full fiscal-year guidance, projecting comparable sales to remain flat to up 2% and adjusted earnings per share of roughly flat to up 4%.

Analysts' reactions ranged from cautious to not bearish, with Stifel raising its price target to $340 from $320 while keeping a Hold rating, and Bernstein trimming its target to $344 from $346. However, CFO Richard McPhail cautioned that the company continues to operate in a frozen housing market environment, as evidenced by July housing starts data showing a steep 12.4% monthly decline to 1.239 million units in annualized terms, the weakest single-family construction reading since late 2022.

The broader market showed little support for Home Depot as the S&P 500 dropped 0.5%, the Nasdaq fell 1.1%, and the Dow slipped 0.2%, amid a 30-year Treasury yield near multi-decade highs, oil prices breaching $90 per barrel for Brent crude, and ongoing geopolitical tensions dampening risk appetite. Despite these headwinds, Home Depot's earnings beat, resilient comparable sales growth, and maintained full-year outlook provided investors with a credible reason to drive the stock higher, even if a challenged housing market and risk-off macro backdrop kept the gain modest relative to the initial pre-market surge.