Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Stocks Rebound • Job Gains • REIT Dividend Boost

Summary

  • U.S. equity markets rebounded Friday on another volatile trading day following a strong slate of employment data as investors remain skittish over the implications of rising interest rates and inflation expectations.

  • Rallying back to end the week with gains of roughly 1%, the S&P 500 finished higher by 2.0% today while the tech-heavy Nasdaq 100 rebounded 1.6% after dipping into "correction-territory."

  • Real estate equities were mostly higher today - but lagged on the week- as the broad-based Equity REIT ETFs finished higher by 1.1% today with 18-of-19 property sectors in positive-territory.

  • Good news is good news? Today's gains came after strong employment data this morning as the BLS reported that the U.S. economy added 379k jobs in February - well above the estimates of 200k.

  • We saw an additional two equity REITs boost their dividend over the last 24 hours: manufactured housing REIT Sun Communities (SUI) boosted its dividend by 5.1% while cell tower REIT American Tower (AMT) raised its payout by 2.5%.Real Estate Daily Recap

U.S. equity markets rebounded Friday on another volatile trading day following a strong slate of employment data as investors remain skittish over the implications of rising interest rates and inflation expectations. Rallying back to end the week with gains of roughly 1%, the S&P 500 ETF (SPY) finished higher by 2.0% today while the tech-heavy Nasdaq 100 (QQQ) rebounded 1.6% after dipping into "correction territory" earlier in the day. Real estate equities were mostly higher today, as the broad-based Equity REIT ETFs (VNQ) finished higher by 1.1% today with 18-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 0.5%.

After pushing above 1.60% early in the day, equity markets staged a mid-day comeback coinciding with a bid for Treasuries, which sent the 10-Year Treasury Yield (IEF) retreating back down to 1.55% - ending flat on the day - but higher by 9 basis points on the week. All 11 GICS equity sectors finished higher on the day led by the Energy (XLE) and Industrials (XLI) sectors while homebuilders and the broader Hoya Capital Housing Index delivered a strong day following a pull-back earlier this week on concerns over the impact of the recent uptick in mortgage rates. We'll publish a full analysis and commentary of this week's developments in the real estate industry in our Real Estate Weekly Outlook report on Saturday morning.

Good news is good news? Today's gains came after strong employment data this morning as the Bureau of Labor Statistics reported that the U.S. economy added 379k jobs in February - far above the estimates of 200k - and revisions to the prior two months added another 38k to the total employment level. Driven primarily by a surge in restaurant hiring as several states have started to lift COVID restrictions, the "headline" unemployment rate ticked lower to 6.2%. The strong nonfarm payrolls report, however, followed mixed data from the ADP report and Initial Jobless Claims data earlier in the week.

"Beat and Boost" continues to be the theme of REIT earnings season. We saw an additional two equity REITs boost their dividend over the last 24 hours: manufactured housing REIT Sun Communities (SUI) boosted its dividend by 5.1% while cell tower REIT American Tower (AMT) raised its payout by 2.5%. Both of these REITs have been among the leaders in dividend growth across the REIT sector over the past half-decade. We've now seen 36 equity REITs raise their dividend this year.

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