5G Cooldown? • REIT Earnings • Rally Fades
U.S. equity markets slumped Thursday while benchmark interest rates jumped as investors weighed surprisingly strong employment data and sluggish earnings reports from several large-cap technology stocks.
Retreating from its highest close since January 2022, the S&P 500 slipped 0.7% today, while the tech-heavy Nasdaq 100 dipped more than 2%.The Dow, however, posted a ninth-straight daily advance.
Real estate equities finished mostly lower today as the initial wave of earnings results from industrial and technology REITs has been modesty disappointing. The Equity REIT Index slipped 0.3%.
Cell tower REIT Crown Castle (CCI) dipped 5% today after reporting soft second-quarter results and lowered its full-year adjusted FFO outlook citing a "significant" slowdown in carrier network spending.
NYC-focused SL Green (SLG) dipped more 6% after its second-quarter results did little to alter the dire narrative enveloping coastal office properties.
Income Builder Daily Recap
U.S. equity markets slumped Thursday while benchmark interest rates jumped as investors weighed surprisingly strong employment data and sluggish earnings reports from several large-cap technology stocks. Retreating from its highest close since January 2022, the S&P 500 slipped 0.7% today, while the tech-heavy Nasdaq 100 dipped over 2%. The Dow, however, managed to advance for a ninth-straight session. Real estate equities finished mostly lower today as the initial wave of earnings results from industrial and technology REITs has been modesty disappointing. The Equity REIT Index slipped 0.3% today, but 11-of-18 property sectors finished in positive territory, while the Mortgage REIT Index declined 1.5%. The red-hot homebuilders slumped more than 4% despite a very strong report and upward guidance boost from DR Horton - the nation's largest builder - which reported a 37% year-over-year increase in net orders and far-exceeding EPS and revenue estimates.
Cell Tower: Crown Castle (CCI) dipped 5% today after reporting soft second-quarter results and lowered its full-year adjusted FFO outlook citing a "significant" slowdown in carrier network spending. CCI now expects its full-year FFO to rise 1.9% this year - a 110 basis point decrease from its prior outlook of 3.0% growth - but maintained its guidance ranges for revenues, adjusted EBITDA, and same-store property revenues. Industry-level commentary was surprisingly downbeat, with CCI noting that "the initial surge in tower activity [related to the 5G rollout] has ended," which led to a decline in tower activity (equipment upgrades and modifications) of more than 50% in the second-quarter. On the impacts of the recent WSJ reporting on potential remediation costs for AT&T and Verizon of old abandoned lead-containing network cables, CCI commented that it has "not seen any behavior change from our carrier customers... but obviously, they’re very healthy and have a long history of being able to navigate through various cycles."
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