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  • Alex Pettee, CFA

Mall Rescue | Tech Rebound | Housing Stays Hot

Updated: Sep 10, 2020

Daily Recap

  • U.S. equity markets bounced back Wednesday following a three-day sell-off as signs of progress on a fiscal stimulus package and strong housing market data offset concerning pandemic trends in Europe.

  • Bouncing-back from declines of 2.7% yesterday, S&P 500 finished higher by 2.0% today while the Dow Jones Industrial Average jumped 440 points and the Nasdaq 100 rose by nearly 3%.

  • Following three straight days of outperformance, Equity REIT ETFs (VNQ) finished higher by 1.0% today with 13 of 18 property sectors finishing in positive territory.

  • Simon Property (SPG) and Brookfield Property (BPY) are reportedly close to finalizing an $800m deal to save JC Penney from bankruptcy, a move that would save 70,000 jobs and 650 stores.

  • Mortgage applications to purchase a single-family homes rose yet again last week and are now higher by 40% from last year as the housing industry continues to lead the post-pandemic recovery

U.S. equity markets bounced back Wednesday following a three-day sell-off as signs of potential progress on a fiscal stimulus package and strong housing market data offset concerning pandemic trends in Europe. Following declines of 2.7% yesterday, S&P 500 ETF (SPY) finished higher by 2.0% today while the Dow Jones Industrial Average (DJI) jumped 440 points and the Nasdaq 100 (QQQ) rose nearly 3%. Following three straight days of outperformance, the Equity REIT ETFs (VNQ) finished higher by 1.0% today with 13 of 18 property sectors finishing in positive territory. The Mortgage REIT ETF (REM), meanwhile, higher by 1.3% after gaining 0.1% yesterday.

Today's rebound comes one day after the major large-cap indexes entered "correction territory' with declines of at least 10% and came despite a potential setback in the vaccine race as AstraZeneca (AZN) temporarily paused their Phase 3 clinical trials of one of the leading Covid-19 vaccine candidates after the unexplained illness of a study participant. The setback also comes amid a reacceleration in coronavirus case counts in several European countries while case counts in the U.S. continue to wane. All 11 GICS equity sectors finished higher on the day, led by the Technology (XLK), Materials (XLB), and Consumer Discretionary (XLY) sectors.

The red-hot housing market is showing no signs of cooling. Homebuilders and the broader Hoya Capital Housing Index rallied today after the Mortgage Bankers Association reported that mortgage applications to purchase a single-family home are now higher by 40% from last year. The rebound in housing market activity - a key driver of the recent economic rebound - has been aided by longer-term macroeconomic trends of favorable millennial-led demographics, historically low housing supply, and record-low mortgage rates. The 30-Year Fixed Mortgage Rate with conforming loan balances stands at 3.07%, just above record-low-levels, and down 67 basis points from last year. 

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