• Alex Pettee, CFA

Fed Sparks Sell-Off As Shortages Worsen

  • U.S. equity markets slid to their worst week since February after the Federal Reserve accelerated its "lift-off" plans in response to surging inflation, sparking a sell-off in economically sensitive assets.

  • Snapping a three-week winning streak and retreating from record-highs set last week, the S&P 500 declined 2.2% on the week while the Mid-Cap 400 and Small-Cap 600 each dipped by 5%.

  • Real estate equities were also under pressure despite a wave of dividend increases this week as Equity REITs dipped 3.1% while Mortgage REITs declined by 3.8%. Homebuilders were relative outperformers.

  • Soaring prices and supply chain constraints have cooled the pace of new home construction despite a historic and lingering housing shortage. Meanwhile, data this week showed that rents across the country continue to soar.

  • The wave of dividend increases continued across the REIT sector as five equity REITs and three mortgage REITs boosted their dividends this past week. REITs are now the top-performing asset class this 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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