Home Depot's 4.28% Plunge: Earnings Miss, Housing Woes, and Sector Turbulence Collide

Summary
• The Home Depot (HD) plunges 4.28% to $343.86, its worst intraday drop since 2022
• Q3 earnings miss estimates for third straight quarter; full-year profit outlook cut by 3%
• Housing market stagnation, consumer uncertainty, and lack of storm activity cited as key culprits

The Home Depot’s stock has plunged nearly 4.3% in volatile intraday trading, driven by a third consecutive earnings miss and a sharply revised profit outlook. With the housing market in a prolonged slump and consumer spending on home projects waning, the retail giant’s shares are under pressure. The move has dragged down the broader home improvement sector, with Lowe’s (LOW) also down 1.6% as investors reassess risk exposure.

Earnings Miss and Housing Market Pressures Drive Sharp Selloff
Home Depot’s Q3 earnings report revealed a $3.74 adjusted EPS, missing estimates by $0.10, and a $41.35 billion revenue figure that fell short of Wall Street’s $41.1 billion forecast. CEO Ted Decker attributed the underperformance to 'consumer uncertainty and continued pressure in housing,' with weaker-than-expected demand for home improvement projects. The company slashed its full-year adjusted EPS guidance from a 2% decline to a 5% drop, citing stagnant housing turnover, elevated mortgage rates, and a lack of storm-related sales. Analysts highlight that Home Depot’s customer base—predominantly homeowners—has shifted toward smaller projects and deferred major renovations, compounding the impact of a 'deferral mindset' since mid-2023.

Home Improvement Sector Under Pressure as Consumer Confidence Wanes
The home improvement sector is broadly underperforming, with Lowe’s (LOW) down 1.6% in pre-market trading. Both retailers face similar headwinds: a stagnant housing market, higher borrowing costs, and a shift in consumer priorities toward travel and experiences over home upgrades. Neil Saunders of GlobalData notes that 'home improvement demand is disproportionately impacted by macroeconomic uncertainty,' with discretionary projects like kitchen remodels and major additions seeing the steepest declines. While Home Depot’s premium product sales rose 2.3%, softer engagement in large-ticket projects and a 1.6% drop in customer transactions underscore the sector’s fragility.

Bearish Options and ETFs Target Volatility Amid Earnings Shockwave
• 200-day average: 379.36 (above) • RSI: 23.34 (oversold) • MACD: -7.37 (bearish) • Bollinger Bands: 358.97–394.98 (trading near lower band)

Technical indicators suggest a short-term bearish bias, with HD trading near its 200-day support level of $366.98. The RSI at 23.34 indicates oversold conditions, but the MACD histogram (-1.19) and declining volume suggest momentum remains weak. For options traders, the most compelling contracts are those with high leverage and moderate delta to capitalize on a potential 5% downside move to $326.67. Two top picks from the options chain are:

• HD20251128P340: Put option with 340 strike, 26.49% IV, 0.39 delta, 0.0625 theta, 0.0243 gamma, $300,809 turnover. This contract offers 76.92% leverage and is positioned to benefit from a sharp decline below $340, with high gamma ensuring sensitivity to price swings.
• HD20251128P335: Put option with 335 strike, 27.29% IV, 0.28 delta, 0.0974 theta, 0.0206 gamma, $154,114 turnover. With 118.97% leverage and moderate delta, this option balances risk and reward for a mid-term bearish play.

Payoff analysis: At a 5% downside to $326.67, HD20251128P340 would yield a $13.33 profit per contract, while HD20251128P335 would return $8.33. Both contracts are liquid and well-positioned for a continuation of the selloff. Aggressive bears may consider HD20251128P340 into a breakdown below $340, while cautious traders might target HD20251128P335 for a mid-term play.

Backtest The Home Depot Stock Performance
To evaluate Home Depot’s (HD) performance after –4 % plunges, I need to:1. Retrieve daily price data for the stock from 2022-01-01 to today.2. Locate all trading days on which the closing return (close ÷ prior-close – 1) ≤ –4 %.3. Feed those dates into an event-backtest engine to measure the post-event performance.My previous data-pull attempt failed because the ticker format or query string was not accepted by the data provider. To proceed smoothly, please confirm three quick points:1. Ticker symbol • Home Depot normally trades under “HD” on the NYSE. Shall I use “HD” (without the “.N” suffix)?2. Event definition • Should we use the daily close-to-close change ≤ –4 %? (If you actually mean intraday low relative to the previous close, let me know.)3. Any additional risk-control settings you’d like in the analysis (e.g., maximum holding days, stop-loss/take-profit)?Once I have these confirmations, I’ll pull the data, identify the –4 % days, and run the back-test automatically.

Short-Term Bear Case Intensifies: Watch $325 Support and Sector Sentiment
The selloff in Home Depot reflects a broader shift in consumer behavior and macroeconomic fragility. With housing turnover at a multi-decade low and mortgage rates above 6%, the company’s reliance on discretionary home projects remains a vulnerability. Investors should monitor the $325 level—a critical support zone—as well as sector sentiment, particularly Lowe’s (LOW) performance. A breakdown below $325 could trigger a wave of panic selling, while a rebound above $348.80 (intraday high) might signal a short-covering rally. For now, the bearish thesis holds, and options like HD20251128P340 offer high-leverage exposure to a potential 5% decline. Watch for further guidance from Home Depot’s earnings call and sector peers to gauge the depth of the downturn.