Okay besties, the midterms just shook up Wall Street and your favorite home improvement stocks are having a MOMENT.
So here’s the tea: stocks soared on Wednesday after Democrats pulled off a clean sweep in the midterm election. And yes, I know election news can feel about as exciting as reading a prospectus, but stick with me — because when politics moves markets this dramatically, there are actually some juicy lessons for us as investors.
Let me walk you through what happened, why it matters, and what I’d actually do with this information.
What Went Down
Stocks were actually down Tuesday night when results started rolling in — partly because investors were nervous about a potential data center crackdown. But futures turned green later that evening, and by Wednesday, all three major indexes were soaring. It’s like when you bracingly open your credit card statement and instead of a horror show, you find a cashback bonus. Relief rally, baby.
It wasn’t one single reason stocks jumped — it was a cocktail of factors. Investors were glad to see pushback on the Trump administration validated, including on inflation and the war in Iran. Here’s a fun little market quirk to remember: investors tend to like divided government. Markets crave predictability, and gridlock often means fewer surprises. With Democrats now holding solid control of both houses of Congress, investors got exactly that.
And then there was the tone shift. President Trump was surprisingly conciliatory, saying he would absolutely accept the election results and was willing to work with Democrats — which could pave the way to a productive Congressional term. Markets don’t just price in numbers, y’all. They price in vibes. Confidence, cooperation, calm — that’s investor catnip.
The Housing Comeback Nobody Saw Coming
Now for my favorite part of the story: housing stocks. This sector has been languishing for two years thanks to high mortgage rates and weak housing turnover — basically, nobody’s buying homes, nobody’s renovating them, and everyone’s just… vibing in place.
But on Wednesday? The State Street SPDR S&P Homebuilders ETF (XHB) closed up 5.4%, hitting its highest point in more than two months. Home Depot finished up 6.5%, and Lowe’s jumped a whopping 7.5%. That’s not a bump — that’s a block party. 🎉
Here’s what I find interesting: Democrats haven’t outlined any specific housing policy proposals yet. The rally was driven purely by hope that the shake-up in Congress will help solve the nation’s housing crisis and boost demand for the two big home improvement retailers. This is why I tell my coaching clients: stock prices move on expectations, not just results. Sometimes the market celebrates the promise of the party before anyone’s even sent out the invites.
Can Democrats Actually Spark a Housing Turnaround?
Okay, let’s get into the substance, because hope is cute but policy pays the bills.
Expected incoming Speaker of the House Hakeem Jeffries said the election was about affordability and that tackling high housing costs should be a top priority for the new majority. We’ve already seen some movement on this front — Democrats strongly supported the housing affordability bill that became law this summer, which was designed to boost housing supply and capped single-family home purchases by large institutional investors. (If you’ve ever wondered why you keep getting outbid on houses, institutional buyers were a big part of that story.)
But here’s the real test, and honestly the whole ballgame: interest rates. The best thing Democrats could do for housing is help bring rates down, which would lower mortgage rates in turn. How? By cooling inflation. That could be helped by ending the war in Iran and easing constraints in the Strait of Hormuz, which would bring energy prices down. On top of that, Democrats could help end the tariff regime and push policies that increase the supply of goods and services — more supply, lower prices. Economics 101, but make it congressional.
And here’s a promising early signal: the 10-year Treasury yield fell 1.2% on Wednesday, closing at 4.89%. That may be a sign investors are expecting rates to fall. Think of the Treasury yield like the market’s mood ring — when it moves, investors are telling you how they feel about the future.
So… Will Home Depot and Lowe’s Keep Rising?
Here’s my honest read, and what I’d tell you if we were chatting over iced matchas in Austin.
Realistically, with the exception of interest rates — which can come down simply from changes in investor behavior and expectations — it will take months for any meaningful policy to emerge from Congress. Congress moving fast is like waiting on a group text reply from your married friends: technically possible, practically unlikely.
But — and this is a big but — sentiment counts for a lot in the stock market. That sentiment alone could keep lifting these stocks, exactly like we saw today. And if consumers actually start feeling inflation ease? We could see a real boost in traffic at Home Depot and Lowe’s as homeowners finally tackle all those projects they’ve been putting off. You know the drawer of half-finished Pinterest boards I’m talking about.
These stocks are overdue for a recovery, but the conditions need to be right for the businesses themselves to bounce back. Investors are clearly ready for it — Wednesday’s reaction proved that. So here’s what I’d do: keep your eye on new housing policy once the new year begins. Home Depot and Lowe’s could bounce off of any promising new proposals, and being ready before the headlines hit is how you invest smart instead of chasing hype.
The big picture lesson here? Markets react to elections, sentiment, and expectations long before actual policy shows up. That’s exactly why I always say: don’t invest based on one day’s headlines — invest based on trends, patience, and a plan. But DO pay attention when entire sectors start moving, because that’s the market telling you where the money’s flowing next.
If this helped you finally understand why stocks move on election weeks (without the jargon headache), slide into my DMs and tell me what sector you’re watching — or better yet, join my mailing list so you never miss a market moment explained in plain English. Your wealthy girl era starts now. 💛
