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  • Alex Pettee, CFA

Dividend Boosts • Inflation Cools • REIT Earnings Updates

Summary

  • U.S. equity markets were mixed Wednesday on another frenetic day of corporate earnings reports while inflation data showed that consumer prices were steady in January even as inflation expectations surged.

  • Following a decline of 0.1% yesterday, the S&P 500 finished fractionally lower today but remains within 0.1% of record-highs, while the Dow Jones Industrial Average finished higher by 63 points.

  • Real estate equities delivered another strong day ahead of a jam-packed 48-hours of earnings reports as the broad-based Equity REIT ETFs gained 0.5% today with 13-of-19 property sectors in positive-territory.

  • Providing a boost to the yield-sensitive equity sectors, inflation data this morning showed that despite the recent surge in inflation expectations, core consumer prices - excluding energy - were flat in January.

  • More than two dozen REITs will report results over the next 24 hours. American Assets (AAT) was higher today after becoming the 12th REIT to increase its dividend this year.

Real Estate Daily Recap

U.S. equity markets were mixed Wednesday on another frenetic day of corporate earnings reports while inflation data showed that consumer prices were steady in January even as inflation expectations surged. Following a decline of 0.1% yesterday, the S&P 500 ETF (SPY) finished fractionally lower today but remains within 0.1% of record-highs, while the Dow Jones Industrial Average (DIA) finished higher by 63 points. Real estate equities delivered another strong day ahead of a jam-packed 48-hours of earnings as the Equity REIT ETFs (VNQ) gained 0.5% today with 13-of-19 property sectors in positive territory while Mortgage REITs (REM) gained 0.6%.

Five of the eleven GICS equity sectors finished on higher today, led to the upside by the Energy (XLE), Communications (XLC), and Commerical Real Estate (XLRE) sectors. Homebuilders and the broader Hoya Capital Housing Index were mostly higher today ahead of earnings this afternoon from Zillow (Z) and after the Mortgage Bankers Association reported that mortgage applications to purchase a home are now higher by 17% from last year as the housing industry remains a source of strength in the early economic recovery.

All eyes are on inflation data after Democrats won the "trifecta" of political control in Washington DC as fiscal stimulus is high on the political docket. Inflation expectations - and long-term interest rates - jumped to mid-pandemic highs earlier this month, but pulled back today after the BLS reported this morning that the Core Consumer Price Index (CPI) was flat in January, pulling the annual increase down to 1.39%. The "headline" CPI index recorded a 0.3% increase in January, however, as gasoline and fuel prices jumped from last month, but the headline CPI Index is still higher by just 1.35% over the past year.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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