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  • Alex Pettee, CFA

Lower For Longer | Narrow Rally | Cell Tower M&A?

Updated: Sep 10, 2020

Daily Recap

  • U.S. equity markets finished higher Wednesday, continuing a relentless but relatively narrow rally led by the mega-cap technology stocks while the Fed signaled its intentions to keep rates lower for longer.

  • Eclipsing yet another record-high on its fifth straight day of gains, the S&P 500 finished higher by 1.0% and the Nasdaq 100 surged 2.1%. The Dow gained 83 points.

  • Coming off two straight days of gains, Equity REITs finished lower by 1.0% today with 15 of 18 property sectors finishing in negative territory. Mortgage REITs declined 1.5%.

  • Reuters reported today that private equity firm Digital Colony Partners has contacted cell tower REIT Crown Castle (CCI) to signal interest in buying a minority stake in its fiber-cable business. CCI is the second-largest REIT by market capitalization.

  • The red-hot housing market is showing no signs of cooling. The Mortgage Bankers Association today reported that mortgage applications to purchase a home increased again last week and are now higher by 33% from last year.

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 finished higher Wednesday, continuing a relentless but relatively narrow rally led by the mega-cap technology stocks while the Fed signaled its intentions to keep rates lower-for-longer. Eclipsing yet another record-high on its fifth straight day of gains, the S&P 500 ETF (SPY) finished higher by 1.0% and the Nasdaq 100 ETF (QQQ) surged 2.1%. The Dow Jones Industrial Average (DJI) gained 83 points following yesterday's 60 point decline. Coming off two straight days of gains, the Equity REIT ETF (VNQ) finished lower by 1.0% today with 15 of 18 property sectors finishing in negative territory. The Mortgage REIT ETF (REM) finished lower by 1.5% following declines of 0.6% yesterday. 

Despite the seemingly robust 1% gains on the S&P 500, just 4 of the 11 GICS equity sectors finished in positive territory today, continuing a theme of narrow leadership that we've noted over the past several weeks. The Communications (XLC) and Technology (XLK) sectors led the way as earnings results from the "stay at home" stocks continue to impress, underscored by Salesforce's (CRM) earnings yesterday afternoon. Energy (XLK) stocks lagged again as Hurricane Laura, currently a Category 4 storm, threatens coastlines along the Gulf of Mexico. Homebuilders lagged despite strong earnings results from Toll Brothers (TOL) and robust mortgage demand data as the Hoya Capital Housing Index finished lower by roughly 1% on the day while Home Depot (HD) and Lowe's (LOW) were among the leaders.

The red-hot housing market is showing no signs of cooling. The Mortgage Bankers Association today reported that mortgage applications to purchase a home increased again last week and are now higher by 33% from last year. Homebuilders have been among the hottest equity market sectors over the last quarter as the housing market continues to lead the early stages of the post-pandemic economic recovery. The wave of refinancing appears to be finally cooling, however, as applications for refinancing loans are higher by "just" 34% from last year after a boom in April that saw applications rise by more than 200% from last year. The 30-Year Fixed Mortgage Rate with conforming loan balances stands at 3.11%, just above record-low-levels, and down 62 basis points from last year. 

To read the full report, click here to visit Seeking Alpha!

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