Shares of Lowe's (NYSE:LOW) were moving higher today as the home-improvement retailer caught a tailwind from the rebound in the broader market on hopes for a federal stimulus. Lowe's also revealed that CEO Marvin Ellison bought about $1 million worth of company stock on Friday.
On another volatile trading day, Lowe's shares were up 8.7% as of 3:23 p.m. EDT, while the S&P 500 was up 4.2% at the same time.
Last night, President Trump floated the idea of a payroll tax cut and other stimulus measures in order to help the economy overcome headwinds related to the coronavirus. Today, the market soared in afternoon trading as Trump met with lawmakers to push for a stimulus package and said he hoped to help industries like airlines and cruise lines that were facing the biggest challenges from the virus.
As a home-improvement retailer, Lowe's may be already benefiting from lower mortgage and lending rates, which would encourage home-buying and spending on home improvements. A stimulus like a payroll tax cut could help the retailer further, putting money in homeowners' pockets ahead of the busy spring home-improvement season.
Meanwhile, investors also learned that Ellison bought 10,000 shares at a price of $103.86 on Friday, likely a sign that he believes the stock has been oversold on the coronavirus scare.
Since the coronavirus sell-off started, Lowe's is still underperforming the market, trading down 18% since Feb. 21. With the current volatility in the market, investors shouldn't assume that today's gains will last. The situation around the novel coronavirus is still evolving, but in its 2020 guidance two weeks ago, Lowe's called for comparable sales growth of 3% to 3.5%, indicating little sign of a headwind from the virus. That forecast combined with Ellison's purchase on Friday seems to signal that business is still going smoothly.