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  • Alex Pettee, CFA

Updated: Sep 10

Daily Recap

  • U.S. equity markets bounced back Wednesday following a three-day sell-off as signs of progress on a fiscal stimulus package and strong housing market data offset concerning pandemic trends in Europe.

  • Bouncing-back from declines of 2.7% yesterday, S&P 500 finished higher by 2.0% today while the Dow Jones Industrial Average jumped 440 points and the Nasdaq 100 rose by nearly 3%.

  • Following three straight days of outperformance, Equity REIT ETFs (VNQ) finished higher by 1.0% today with 13 of 18 property sectors finishing in positive territory.

  • Simon Property (SPG) and Brookfield Property (BPY) are reportedly close to finalizing an $800m deal to save JC Penney from bankruptcy, a move that would save 70,000 jobs and 650 stores.

  • Mortgage applications to purchase a single-family homes rose yet again last week and are now higher by 40% from last year as the housing industry continues to lead the post-pandemic recovery

U.S. equity markets bounced back Wednesday following a three-day sell-off as signs of potential progress on a fiscal stimulus package and strong housing market data offset concerning pandemic trends in Europe. Following declines of 2.7% yesterday, S&P 500 ETF (SPY) finished higher by 2.0% today while the Dow Jones Industrial Average (DJI) jumped 440 points and the Nasdaq 100 (QQQ) rose nearly 3%. Following three straight days of outperformance, the Equity REIT ETFs (VNQ) finished higher by 1.0% today with 13 of 18 property sectors finishing in positive territory. The Mortgage REIT ETF (REM), meanwhile, higher by 1.3% after gaining 0.1% yesterday.

Today's rebound comes one day after the major large-cap indexes entered "correction territory' with declines of at least 10% and came despite a potential setback in the vaccine race as AstraZeneca (AZN) temporarily paused their Phase 3 clinical trials of one of the leading Covid-19 vaccine candidates after the unexplained illness of a study participant. The setback also comes amid a reacceleration in coronavirus case counts in several European countries while case counts in the U.S. continue to wane. All 11 GICS equity sectors finished higher on the day, led by the Technology (XLK), Materials (XLB), and Consumer Discretionary (XLY) sectors.

The red-hot housing market is showing no signs of cooling. Homebuilders and the broader Hoya Capital Housing Index rallied today after the Mortgage Bankers Association reported that mortgage applications to purchase a single-family home are now higher by 40% from last year. The rebound in housing market activity - a key driver of the recent economic rebound - has been aided by longer-term macroeconomic trends of favorable millennial-led demographics, historically low housing supply, and record-low mortgage rates. The 30-Year Fixed Mortgage Rate with conforming loan balances stands at 3.07%, just above record-low-levels, and down 67 basis points from last year. 

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Updated: Sep 10

Daily Recap

  • U.S. equity markets ended extended their sell-off Tuesday with the major averages sliding into correction territory amid a sharp momentum reversal in large-cap technology stocks.

  • After snapping its six-week winning streak with declines of 2.3% last week, the S&P 500 ETF finished lower by another 2.7% today. The Dow Jones Industrial Average slid 632 points.

  • Real estate equities were again among the relative outperformers today amid the broader sell-off as the Equity REIT ETF (VNQ) finished lower by 1.3% today.

  • The pace of dividend cuts has slowed to a trickle in the equity REIT sector. This afternoon shopping center REIT Retail Properties of America (RPAI) announced a resumption of their previously suspended dividend at roughly a third of the pre-pandemic rate.

  • Fellow shopping center REIT Urstadt Biddle (UBA) announced earnings results, while also boosting their previously-reduced dividend. Despite the increase, the current payout is half the pre-pandemic rate.

Our Real Estate Daily Recap discusses the notable news and events in the real estate sector over the last trading day and highlights sector-by-sector performance. We publish this note every afternoon at HoyaCapital.com and occasionally on Seeking Alpha to cover significant news and events. Subscribe to our free mailing list to make sure you never miss the latest developments in the commercial and residential real estate sectors. You can also follow our real-time commentary on Twitter and LinkedIn.

U.S. equity markets ended extended their sell-off Tuesday with the major averages sliding into correction territory amid a sharp momentum reversal in large-cap technology stocks. After snapping its six-week winning streak with declines of 2.3% last week, the S&P 500 ETF (SPY) finished lower by another 2.7% today while the tech-heavy Nasdaq 100 (QQQ) dipped another 4.8% following last week's declines off 3.1%. Real estate equities were again among the relative outperfomers today amid the broader sell-off as the Equity REIT ETFs (VNQ) finished lower by 1.3% today with 17 of 18 property sectors finishing in negative territory. The Mortgage REIT ETF (REM), meanwhile, higher by 0.1% after declining by 2.6% last week. 

As discussed in our Real Estate Weekly Outlook, the "unofficial end" of summer has come with one final "splash" in its final days as volatility returned to U.S. equity markets following several months of relative tranquility. The recent sell-off - which has been largely isolated to the equity markets - has had a different and perhaps "healthy" feel to it compared to the sharp declines seen in March and April as the losses came despite an encouraging slate of employment data last week that showed a continued rebound in labor markets. In what we described as a "Robinhood shakeout," the highest-flying technology names have been among the hardest-hit this week while the "shutdown sensitive" sectors have generally been among the leaders. Commercial real estate (XLRE) and the Hoya Capital Housing Index were among the best-performing equity sectors on the day. 

The economic calendar slows down in the holiday-shortened week after a frenetic slate of employment and housing data over the last two weeks. Inflation data highlights the slate of data with Producer Price Index data on Thursday and Consumer Price Index data on Friday. Inflation metrics showed signs of life in the prior month after most inflation metrics hit multi-decade lows in May and June. As usual, we'll be watching the weekly Mortgage data on Wednesday and Jobless Claims data on Thursday for signs that the housing and employment recovery can continue into early Autumn.

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  • Alex Pettee, CFA

Updated: Sep 10

  • Tech wreck: The "unofficial end" of summer came with one final "splash" in its final days as volatility returned to U.S. equity markets following several months of relative tranquility.

  • Snapping a six-week winning streak and retreating from its mid-week record-high, the S&P 500 dipped 2.3% on the week while the tech-heavy Nasdaq pulled back more than 3%.

  • Real estate equities - particularly in the "shutdown-sensitive sectors" - were among the relative safe-havens this week amid the sell-off as 10 of the 18 property sectors finished in positive territory.

  • Unlike the volatility seen during the peak of the pandemic, the choppiness this week was purely an equity market phenomenon and came despite an encouraging slate of employment and housing market data.

  • U.S. economy recovered 1.4 million jobs in August, and the unemployment rate dipped to 8.4%, as the economic recovery has taken hold far faster than most economists had initially projected.

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