• Alex Pettee, CFA

More Stimulus • Dividend Boosts • Jobless Claims Jump

Summary

  • U.S. equity markets finished mostly lower Thursday as investors awaited details on the stimulus plan from President-Elect Biden as employment data this morning showed continued choppiness in the economic recovery.

  • Now lower by 0.7% on the week, the S&P 500 finished off by 0.4% today while the Dow declined by 69 points. Mid-Caps gained 1.0% while Small-Caps jumped 2.2%.

  • Real estate equities outperformed for the second-straight day - led by the most beaten-down sectors of 2020. The Equity REIT ETF finished higher by 0.6% with 10-of-19 sectors in positive-territory.

  • Tanger Outlets (SKT) jumped 9.6% after announcing that it will resume its suspended dividend at a rate of $0.1775/share dividend, which is roughly half of its prior pre-pandemic rate of $0.36 per share. Tanger remains one of the worst-performing REITs of the past five years.

  • Initial Jobless Claims jumped to the highest level since August at 965k after showing signs of improvement in the prior three weeks. Driving this increase, the recently-enacted stimulus program provides an additional $300 per week in enhanced unemployment payments on top of state benefits.

Real Estate Daily Recap

U.S. equity markets finished mostly lower Thursday as investors awaited details on a fresh stimulus plan from President-Elect Biden as employment data this morning showed continued choppiness in the economic recovery. Now lower by 0.7% on the week, the S&P 500 ETF (SPY) finished off by 0.4% today while the Dow Jones Industrial Average (DIA) declined by 69 points. Real estate equities outperformed for the second-straight day - led by the most beaten-down sectors of 2020 - as the broad-based Equity REIT ETF (VNQ) finished higher by 0.6% with 10 of 19 property sectors in positive territory while the Mortgage REIT ETF (REM) finished higher by 0.9%.

While the large-cap indexes were under pressure, expectations of up to $2 trillion in additional stimulus lifted the Small-Cap (SLY) and Mid-Cap (MDY) to strong gains while Bitcoin (BTC-USD) also jumped another 5% today after an early-week sell-off. A strong day from housing-related retailers and financials lifted the Hoya Capital Housing Index to fresh record-highs. Seven of the eleven GICS equity sectors finished lower on the day, however, as the large-cap Technology (XLE) and Communications (XLC) sectors remain under pressure amid an ongoing social media censorship controversy while the Energy (XLE) sector continued its strong gains in 2021 after a brutal 2020.

Today's mixed performance followed disappointing employment data this morning as Initial Jobless Claims jumped to the highest level since August at 965k after showing signs of improvement in the prior three weeks. Continuing Claims ticked up to 5.27 from 5.07, but since the peak in early May at nearly 25 million, Continuing Claims have retreated by 19.5 million. Perhaps driving these increases, the recently enacted stimulus package provides an additional $300 per week in enhanced unemployment benefits on top of state benefits.

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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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