Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

REITs Soar | Vaccine Breakthrough | Dividends Raised

  • U.S. equity markets surged Monday after Pfizer (PFE) announced positive trial results for its COVID-19 vaccine candidate, a potentially major breakthrough hailed as a "great day for science and humanity."

  • Adding to its 7% post-election surge last week, the S&P 500 finished higher by 1.2% today while the Dow Jones Industrial Average surged 834-points after gaining over 1,800-points last week.

  • Real estate equities - particularly the "shutdown-sensitive" sectors - were among the leaders today. The Equity REIT ETF (VNQ) surged 3.5% led by substantial gains from hotel and retail REITs.

  • Equity markets finished well off their highs of the day, however, amid a sharp sector rotation out of the "stay-at-home winners." The tech-heavy Nasdaq 100 dipped more than 2% while Treasuries were slammed as well.

  • Real estate earnings season wraps-up this afternoon with results from mall REITs Simon Property (SPG) and Taubman Centers (TCO). After the close, Four Corners (FCPT) became the 40th equity REIT to raise its dividend this year.

Real Estate Daily Recap

U.S. equity markets surged Monday after Pfizer (PFE) announced positive trial results for its COVID-19 vaccine candidate, a potentially major breakthrough hailed as a "great day for science and humanity." Adding to its 7% post-election surge last week, the S&P 500 ETF (SPY) finished higher by 1.3% today while the Dow Jones Industrial Average (DIA) surged 834 points after gaining more than 1,800 points last week. Real estate equities - particularly the "shutdown-sensitive" sectors - were among the leaders today as the broad-based Equity REIT ETF (VNQ) surged 3.5% led by more-than-30% gains from the hotel and retail REIT sectors. The Mortgage REIT ETF (REM), meanwhile, jumped more than 5% today. 

Equity markets finished well off their highs of the day, however, amid a sharp sector rotation out of the "stay-at-home winners." The tech-heavy Nasdaq 100 (QQQ), for example, dipped more than 2% while Treasuries were slammed as well with the 10-Year Treasury Yield (IEF) surging 14 basis points to close at the highest level since early March. Strong performance from residential REITs was offset by a dip from the high-flying homebuilders as the Hoya Capital Housing Index was also a laggard on the day. In all, 6 of the 11 GICS equity sectors finished higher on the day, led by the Energy (XLE) and Financials (XLF) sectors while Small-Caps (SLY) surged nearly 5%.

As discussed in our Real Estate Weekly Outlook, after a busy week of employment data, it will be a slower week of economic data in the week ahead headlined by the two major inflation reports. On Thursday, we'll see Consumer Price Index data for October and on Friday, we'll see Producer Price Index data. Inflation metrics perked up a bit during the summer after hitting multi-decade lows during the shutdown-months, but the upward pressure appeared to have stalled in recent months as the pandemic-related supply-chain issues get resolved. We'll again be watching Jobless Claims data on Thursday and JOLTS Job Openings data on Tuesday as well as Mortgage Applications data on Wednesday.

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