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  • Alex Pettee, CFA

Stocks Rebound • REIT Earnings • Week Ahead

Summary

  • U.S. equity markets rallied Monday following the approval of a third coronavirus vaccine in the U.S. and as bond market volatility eased after last week's jump in interest rates.

  • Recovering from declines of 2.5% last week, the S&P 500 finished higher by 2.4% today - its best day since June - while the Dow Jones Industrial Average rallied 600-points.

  • Real estate equities and other yield-sensitive sectors were mostly positive but underperformed the broad-based indexes today as the broad-based Equity REIT ETFs finished higher by 0.4% with 13-of-19 property sectors higher.

  • We're now on the home stretch of another newsworthy REIT earnings with 95% of the REIT sector now having reported results with another dozen REITs set to report this week including Preferred Apartments (APTS) and Uniti Group (UNIT) this afternoon.

  • Employment data highlights this week's busy economic calendar, headlined by ADP Employment data on Wednesday, Jobless Claims on Thursday, and the BLS Nonfarm Payrolls report on Friday.

Real Estate Daily Recap

U.S. equity markets rallied Monday following the approval of a third coronavirus vaccine in the U.S. and as bond market volatility eased following last week's jump in interest rates. Recovering from declines of 2.5% last week, the S&P 500 ETF (SPY) finished higher by 2.4% today while the Dow Jones Industrial Average (DIA) rallied more than 600 points. Real estate equities and other yield-sensitive sectors were mostly positive but underperformed the broad-based indexes today as the broad-based Equity REIT ETFs (VNQ) finished higher by 0.4% with 13-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 1.6%.

As discussed in our Real Estate Weekly Outlook, all eyes were on the 10-Year Treasury Yield (IEF) last week after the benchmark yield briefly surged above 1.60% before retreating back below 1.50% by end of the week. Stabilizing interest rates appeared to calm jitters as all eleven GICS equity sectors finished higher on the day, led to the upside by the Financials (XLF), Technology (XLK), and Energy (XLE) sectors. A strong day from real estate financials and PropTech firms lifted the Hoya Capital Housing Index to solid gains despite a muted day from the homebuilders and residential REITs.

Employment data highlights this week's busy economic calendar, headlined by ADP Employment data on Wednesday, Jobless Claims on Thursday, and the BLS Nonfarm Payrolls report on Friday. Economists are looking for job growth of 165k in February, accelerating from the modest 49k in job gains in January while the unemployment rate is expected to remain steady at 6.3%. We'll also see the weekly MBA Mortgage Application data on Wednesday, and a flurry of PMI data throughout the week.

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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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