Bonds threw a wrench into SWK turnaround story. The stock may need to go

Stanley Black & Decker’s turnaround looks less and less promising as the bond market revolts against the Federal Reserve’s interest rate cuts. We’re at a crossroads with the stock. Shares of Stanley Black & Decker continue to underperform despite the Investing Club’s long-held belief that a rebound in the housing market would follow Fed monetary policy easing. In fact, Stanley Black & Decker has declined more than 21% since the central bank delivered its first rate cut of the cycle on Sept. 18. The Fed’s other two rate reductions — in November and December — haven’t helped either. “I would have liked to have sold much more Stanley Black & Decker, but I got enamored at the idea that as we cut rates we’re going to begin to have some sort of housing [turnaround],” Jim Cramer said Wednesday, adding that more housing formation would boost demand for the Stanley tools and equipment needed to build new homes and renovate existing ones. “But, it hasn’t worked out.” That’s because Fed moves can influence mortgage rates but don’t directly set them. Instead, home loan rates are more closely tied to the 10-year Treasury yield , which keeps going up despite the Fed’s three rate cuts in 2024 and its projections for two more in 2025. Therefore, as the 10-year yield has jumped — hovering near eight-month highs on Wednesday — so have mortgage rates, which are currently just under 7% for a 30-year fixed loan and sitting around their highest levels since July. That crushed home loan demand last week . The move higher in bond yields has likely been caused by trader expectations that the Fed should be more cautious in lowering borrowing costs moving forward after an aggressive start to its easing campaign. “We’ll see in the weeks ahead. If [yields] do charge to 5% on the 10-year; it could be a headwind,” said Jeff Marks, the CNBC Investing Club’s director of portfolio analysis. Marks has pointed out in the past that mortgage rates around 5% to 6.5% tend to spur housing activity. Mortgages dropped steadily from multiyear highs above 7% in June into the Fed’s September rate cut. However, after the cut, they almost immediately started going back up along with bond yields. SWK YTD mountain Stanley Black & Decker (SWK) year-to-date performance Stanley Black & Decker stock has gained about 1% in 2025, roughly matching the S & P 500 ‘s performance. But shares lost 18% for all of last year versus the broader market index’s 23% advance. Moving forward, the Club previously stated it would look to sell Stanley Black & Decker shares into strength. We made a series of Stanley Black & Decker sales above $90 per share back in July. The Club still owns 760 shares for a 1.7% weighting in the portfolio. Thankfully, we’ll get paid to wait, with the stock’s 4% annual dividend yield. We telegraphed this stance back in December when we downgraded Stanley Black & Decker shares to our 3 rating after management shared more about the negative impact President-elect Donald Trump ‘s proposed tariff increases may have on the company’s China market. Tariff risk and stalled housing are a bridge too far. We plan to use those future sales proceeds from Stanley to add to our Home Depot position. There’s less tariff exposure for the home improvement retailer. In our Stanley Black & Decker downgrade, we wrote, “We want to have less tariff risk ahead of Inauguration Day. … However, we don’t want to lose exposure to [the] home improvement theme because housing turnover is at a 30-year low and the pent-up demand will be unleashed when mortgage rates [eventually] fall.” (Jim Cramer’s Charitable Trust is long SWK, HD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Based in New Britain, Conn., Stanley Black & Decker is the largest maker of hand tools, power tools, and related accessories in the U.S. The company enjoys a 40 percent market share in tools, making it the “undisputed king of the market,” Cramer said.While Stanley Black & Decker is profiting from a surge in spending at home improvement retailers Lowe’s and Home Depot, each of which accounts for more than 10 percent of Stanley’s sales, the company’s shares are actually down 1 percent in the last

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Stanley Black & Decker’s turnaround looks less and less promising as the bond market revolts against the Federal Reserve’s interest rate cuts. We’re at a crossroads with the stock.