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  • Alex Pettee, CFA

Tech Wreck | REITs Stable | Robinhood Shakeout

Updated: Sep 10, 2020

Daily Recap

  • U.S. equity markets plunged Thursday amid a sharp sell-off in the high-flying technology names despite encouraging jobless claims data showing signs of continued healing in the U.S labor markets. After hitting fresh record-highs yesterday, the S&P 500 finished lower by 3.4% today while the Dow Jones Industrial Average dipped 808 points following yesterday's 455 point rally. Real estate was the relative safe-haven today amid the broader sell-off as Equity REITs finished lower by just 1.3% today with 8 of 18 property sectors finishing in positive territory. Today's sell-off had a different - and perhaps oddly encouraging - feel to it compared to the sharp declines seen in March and April. Described as a "Robinhood shakeout," the high-flying speculative names were among the hardest-hit today. Today's gains came despite generally positive employment data with Initial and Continuing Jobless claims each declining from last week. Since the peak in early May at around 25 million, Continuing Claims have retreated by 11.6 million.

Our Real Estate Daily Recap discusses the notable news and events in the real estate sector over the last trading day and highlights sector-by-sector performance. We publish this note every afternoon at HoyaCapital.com and occasionally on Seeking Alpha to cover significant news and events. Subscribe to our free mailing list to make sure you never miss the latest developments in the commercial and residential real estate sectors. You can also follow our real-time commentary on Twitter and LinkedIn.

U.S. equity markets plunged Thursday amid a sharp sell-off in the high-flying technology names despite encouraging jobless claims data showing signs of continued healing in the U.S labor markets. After hitting fresh record-highs yesterday, the S&P 500 ETF (SPY) finished lower by 3.4% today while the Dow Jones Industrial Average (DJI) dipped 808 points following yesterday's 455 point rally. Real estate was the relative safe-haven today amid the broader sell-off as the Equity REIT ETFs (VNQ) finished lower by just 1.3% today with 8 of 18 property sectors finishing in positive territory. The Mortgage REIT ETF (REM), meanwhile, finished lower by 1.4%.

Today's sell-off had a different - and perhaps oddly encouraging - feel to it compared to the sharp declines seen in March and April in which the economically-sensitive sectors, along with essentially all  Small-Cap (SLY) and Mid-Cap (MDY), stocks were pummeled amid the ongoing economic shutdowns. While all 11 GICS equity sectors were lower on the day, as were homebuilders and the broader Hoya Capital Housing Index, the "shutdown sensitive" sectors were actually among the outperformers today. Described as a "Robinhood shakeout," the high-flying speculative names were among the hardest-hit today. Concerns over extended valuations on several large-cap technology names resulted in the Nasdaq 100 (QQQ) plunging 5.1% today, its worst day since March, but remains higher by more than 30% YTD.

Today's gains came despite generally positive employment data with Initial and Continuing Jobless claims each declining from last week on a seasonally-adjusted basis. Interestingly, the non-seasonally adjusted claims data that were largely ignored when they were showing positive trends have suddenly become the focus after the unadjusted data showed a mild uptick this week in Initial Claims. Initial Jobless Claims declined to 0.90 million in today's report, retreating from 1.01 million last week. Perhaps more encouragingly, Continuing Claims dipped by another 1.24 million last week to 13.25 million. Since the peak in early May at around 25 million, Continuing Claims have retreated by 11.6 million. All eyes are now on the BLS report tomorrow which is expected to show employment gains of roughly 1.4 million in August while the headline unemployment rate is expected to pull back below 10%. 

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