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  • Alex Pettee, CFA

REITs Rally | Apartment Spin-Off | Vaccine Restart

  • Daily Recap

  • U.S. equity markets rebounded Monday following two-straight weeks of declines amid a flurry of M&A news and after clinical trials of a leading vaccine candidate were restarted in the U.K.

  • Recovering from a 2.5% decline last week, S&P 500 finished higher by 1.3% while the tech-heavy Nasdaq 100 gained 1.7% after dipping into correction territory last week.

  • Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) finished higher by 2.5% today with all 18 property sectors in positive territory.

  • Apartment Investment and Management (AIV) jumped more than 7% today after it announced plans to split into two separate publicly traded companies.

  • Student housing REIT American Campus (ACC) jumped more than 5% after it announced that its portfolio is 90.3% leased for the academic year as students returned to flagship "college towns" despite fully-remote learning options as many institutions.

U.S. equity markets rebounded Monday following two-straight weeks of declines amid a flurry of M&A news and after clinical trials of a leading vaccine candidate from AstraZeneca (AZN) were restarted in the U.K. after a safety-related pause while U.S. trials remain on hold. Recovering from a 2.5% decline last week, S&P 500 ETF (SPY) finished higher by 1.3% while the tech-heavy Nasdaq 100 (QQQ) gained 1.7% after dipping into correction territory last week. Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) finished higher by 2.5% today with all 18 property sectors in positive territory. The Mortgage REIT ETF (REM), meanwhile, jumped 3.4%.

As discussed in our Real Estate Weekly Outlook, the recent choppiness in financial markets has been exacerbated by Congress' inability to reach a compromise on a renewed coronavirus relief bill, but solid economic data and encouraging coronavirus trends in the United States have so-far blunted the impact. All 11 GICS equity sectors finished in positive territory today, led by the Real Estate (XLRE), Technology (XLK), and Materials (XLB) sectors. Residential REITs led the Hoya Capital Housing Index to strong gains today ahead of a busy week of housing data in which investors will be parsing data to see if the red-hot housing market, which has led the early post-pandemic rebound, can continue its strength into the cooler months. 

We have a busy slate of economic and housing data in the week ahead. On Wednesday, we'll see Homebuilder Sentiment for September, which unexpectedly surged last month to record-high levels. Also on Wednesday, we'll see Retail Sales data for August, which had completed the V-shaped recovery last month as retail spending exceeded pre-pandemic levels. On Thursday, we'll see Housing Starts and Building Permits for August. Housing Starts jumped 22.6% last month to a seasonally adjusted annual rate of 1.50 million units while Building Permits rose 18.8% to a rate of 1.50 million units. As usual, we'll also be watching the weekly Mortgage data on Wednesday and Jobless Claims data on Thursday.

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