Daily Recap: Oil Surges | REITs Gain | Big Week of Housing Data

September 16, 2019 | Hoya Capital

Daily Recap: Oil Surges | REITs Gain | Big Week of Housing Data Uncategorized Sep 16 Written By This weekend's drone attacks on Saudi Arabia's oil industry sent crude oil futures, and oil-tracking ETFs (USO) surging by more than 10% on the day, logging one of the largest one-day moves in the commodity of all time. Highlighting the profoundly different economic dynamics today than in decades-past where the United States was highly dependent on foreign oil, US stock markets were relatively unscathed by the new and unwelcome risk to global economic growth.

The S&P 500 ETF (SPY) finished lower by 0.3% while the Nasdaq ETF (QQQ) finished off by 0.5%. Continuing a broader theme of sector and factor-rotation that has occurred over the past month, the small-cap Russell 2000 (IWM) climbed 0.4%. Coming off a 2% decline last week, real estate was one of the best-performing equity sectors on the day with the broad-based REIT ETF (VNQ) gaining 1.0%. Surprisingly, the 10-year Treasury yield, which has historically exhibited a high correlation with oil prices, actually retreated by six basis points on the day, suggesting that either investors are betting that the near-term oil price surge is transitory, or that a "bid for safety" overwhelmed the upward pressure on inflation expectations typically associated with rising oil prices.

Coming off a record weekly closing high for the housing industry benchmark, the Hoya Capital Housing Index finished roughly flat on the day, led to the upside by the Real Estate Technology & Brokerage and Residential REIT sectors. Ahead of a critical week of single family housing data, the single-family homebuilder ETFs (XHB and ITB) finished slightly lower. Toll Brothers (TOL), Redfin (RDFN), Realogy (RLGY), and Re/Max (RMAX) were upside standouts on the day while PPG (PPG), AO Smith (AOS), and Sherwin Williams (SHW) were among the laggards in the housing benchmark.

Gains in the commercial REIT sector were led by the data center, ...