Home Depot stock, homebuilder sentiment, Lyft CEO's stake: Top Stocks

Home Depot (HD) shares close higher today after reporting a slight second-quarter earnings beat and reaffirming its full-year guidance while sales numbers trend lower. The National Association of Home Builders reports a six-point decline in U.S. homebuilder sentiment amid rising mortgage rates; homebuilder stocks like Lennar (LEN) and D.R. Horton (DHI) are rising in this environment. Lastly, Lyft stock ticks up after CEO David Risher purchases 100,000 shares.

Yahoo Finance Live anchors Akiko Fujita and Seana Smith take a look at several of the top trending stocks after the closing bell.

Video Transcript

SEANA SMITH: First up, taking a look at shares of Home Depot closing just above the flat line after the company saw sales fall 2% compared to a year ago, driven lower by a decrease in transaction growth. The company also reaffirming its guidance that it set last quarter, expecting a drop in sales and adjusted earnings for the full year as consumers remain cautious. The reason, though, why we're not seeing red on the screen is even though we did get that drop in same-store sales, it wasn't as big of a decline, Akiko, as the Street had been bracing for.

But you talk about the fact that consumers are under pressure. They're tightening their budgets. They're not as willing to spend on some of those larger ticket items. And a name like Home Depot it's going to suffer a bit from the shift that we're seeing in consumer spending.

AKIKO FUJITA: Yeah, I mean, it's worth noting again when you look at Home Depot, Lowe's is right in that camp as well. I mean, they have just seen such an incredible run-up over the last three years that it's tough to match that when you consider what things are playing out right now. We did hear the retailer saying essentially they're not going to be raising prices anymore, but they are seeing the consumer turn a bit more cautious to your point, Seana, maybe delaying some of those big ticket items.

The DIY projects aren't happening anymore. That's been the trend for some time now. When you think about the professional builders, they are still going to Home Depot as well. But some of those projects are being delayed out of concerns about rising rates. But also, when you think about the home market, the overall slowdown that we have seen there that's really hit Home Depot in a way as well. So we're seeing that reflected in the numbers we got today.

Now checking in on the home builder sector as rising mortgage rates are taking the steam out of the market, sentiment for newly built homes dropped six points to 50 in August, according to the National Association of Home Builders. That is the first decline in seven months and the lowest level we have seen since May, when sentiment first rose out of negative territory. When you think about what's happening in this space, it is very much sort of the similar storylines that we have been watching, Seana.

It is about higher mortgage rates and seeing increasingly Sellers remain on the sidelines. You talk about buyers getting pushed higher in terms of prices because there's not enough inventory there as well, and that's leading to a broader slowdown even as we see new construction taking shape to increase that inventory.

SEANA SMITH: Yeah, certainly. And we're seeing some of that concern reflected within this index. But when you take a look at the outperformance of so many of these home builders, a sense that started the year, this is a group of stocks that has really been leading. One of the leaders of this rally, you had Lennar, DR Horton, among the names that are up just about 40%. So yes, we are seeing some pressure across the industry today, but certainly, when you take into account the role that some of these home builders are playing in the current market, Akiko, like you were saying.

The fact that inventory is so tight, buyers who are still willing to buy in this higher mortgage rate environment they're almost left with no choice but to opt for a new home and application for mortgages to purchase new homes that rose about 36% from a year ago as we talk about some of these new homes growing their market share of the homes that are available and on the market right now. And also, in the 13 of filings that we got out last night, Berkshire Hathaway, Warren Buffett's company, they're disclosing that it added positions new investments in DR Horton and Lennar and in VR. So he, at least over the last couple of months, still sees some runway here for some of these home builders.

All right, let's also take a look at shares of Lyft higher today on news that its CEO David Risher bought 100,000 shares of the company according to an SEC filing. The executive purchased the shares at 11:46 on Friday, potentially signaling good things to come for the rideshare here. We're looking at a gain of nearly 4% in the stock today. And Akiko, the thought here is that an executive, if they go in and they buy the stock. They're very confident that share price is going to rise. So that's why we're seeing a bit of a movement here to the upside.

So we'll see whether or not some of these gains hold because we know Lyft obviously lags far behind its biggest competitor-- its only competitor Uber really within the space and has much room to improve in order to better compete with Uber.

AKIKO FUJITA: Yeah. And Lyft needs a bit of that vote of confidence. At least for today, we are seeing shares move higher. You could argue that things are starting to turn around for Lyft as well. Yes, they are not as diversified as Uber, as we like to talk about a lot in terms of moving outside or expanding their tentacles beyond ridesharing, but we did see a stronger outlook for Q3. Last week when they reported, we also saw the number of active riders increasing partly because of the aggressive pricing that they have done to try and compete from Uber, and that's brought revenue down, at least the average revenue for riders.

But look, they have had a really tough go. It's not just the executive shakeup. It is about the competition with Uber having to have the incentives in place for the drivers, all of that leading to the declines we've seen for the company. So a new CEO coming in and buying 100,000 shares there, certainly at least a vote of confidence for today.

SEANA SMITH: It is.