Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Dividend Hikes | Elusive Stimulus | Jobs Recovery Moderates

Summary

  • U.S. equity markets rallied Friday, closing the week at fresh record-highs as investors wager that lukewarm employment data may be enough to break the stalemate on stalled fiscal stimulus negotiations.

  • Ending the week with gains of 1.7%, the S&P 500 finished higher by 0.9% today while the Dow Jones Industrial Average advanced 249-points and the Nasdaq 100 gained 0.4%.

  • Real estate equities delivered a solid end to a week of outperformance as the broad-based Equity REIT ETF gained by 0.9% today with 15 of the 18 property sectors in positive-territory.

  • The U.S. economy added 245k jobs in November - slightly below economists' estimates for gains of 460k as the employment rebound has cooled following the initial sharp reopening recovery.

  • We saw an additional five equity REITs boost their dividend this week including announcements this morning from SL Green (SLG) and American Tower (AMT). 46 equity REITs have now raised dividends in 2020 compared to 66 that have reduced or suspended payouts.

Real Estate Daily Recap

U.S. equity markets rallied Friday, closing the week at fresh record-highs as investors wager that lukewarm employment data may be enough to finally break the stalemate on stalled fiscal stimulus negotiations. Ending the week with gains of 1.7%, the S&P 500 ETF (SPY) finished higher by 0.9% today while the Dow Jones Industrial Average (DIA) advanced 249-points and the Nasdaq 100 (QQQ) gained 0.4%. Real estate equities delivered a solid end to a week of outperformance as the broad-based Equity REIT ETF (VNQ) gained by 0.9% today with 15 of the 18 property sectors in positive territory. The Mortgage REIT ETF (REM), meanwhile, gained 2.0% on the day.

Encouraging vaccine news and stimulus hopes combined push the 10-Year Treasury Yield (IEF) to 0.97% - the highest close since March - as some investors see ripe conditions for hotter-than-expected inflation in 2021 amid a post-pandemic economic recovery. 10 of the 11 GICS equity sectors finished in positive territory on the day, led by the Energy (XLE), Materials (XLB), and Real Estate (XLRE) sectors. A strong day from residential REITs offset a decline from the homebuilders to push the Hoya Capital Housing Index into positive territory for the week. We'll have a full analysis of this week's price action in our Real Estate Weekly Recap published tomorrow morning.

The Bureau of Labor Statistics reported that the U.S. economy added 245k jobs in November - slightly below economists' estimates for gains of 460k. The "headline" unemployment rate ticked down to 6.7% from 6.9% in the prior month, but this was driven primarily by a pullback in the labor force participation rate. While the pace of the employment rebound has cooled in recent months, economists from the Congressional Budget Office had initially expected the unemployment rate to remain over 10% through the end of 2021. Over the past six months, 12.3 million jobs have been recovered, but total nonfarm payrolls remain roughly 10 million below pre-pandemic levels.

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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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