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  • Alex Pettee, CFA

Unsettled Election | Rally Continues | Earnings Frenzy

  • U.S. equity markets continued their Election Week rally on Thursday with the major indexes currently on-pace for their best week since April even as several key races remain undecided.

  • Pushing its weekly gains to over 7%, the S&P 500 jumped another 1.9% and the Dow Jones Industrial Average surged another 540-points. The Nasdaq 100 has surged 9% this week.

  • Real estate equities were again a laggard today on the busiest day of earnings season. The Equity REIT ETF (VNQ) finished higher by 0.5% with 13-of-18 property sectors in positive-territory.

  • This week's rally has been fueled in part by the rising likelihood of a "divided government" which reduces the prospects of significant changes to tax or regulatory policy. This outcome, however, may hinge on two runoff Senate elections in Georgia in January.

  • Beneath the election-related headlines, economic data this week has been relatively strong. Initial Jobless Claims ticked lower to 751k from last week's upwardly revised 758k, the lowest week of initial claims since the pandemic began.

Real Estate Daily Recap

U.S. equity markets continued their Election Week rally on Thursday with the major indexes currently on-pace for their best week since April even as several key races - including the Presidency - remain undecided. Pushing its weekly gains to over 7%, the S&P 500 ETF (SPY) jumped another 1.9% today and the Dow Jones Industrial Average (DIA) surged another 540-points. The tech-heavy Nasdaq 100 (QQQ), meanwhile, added another 2.6% and is higher by more than 9% this week. Real estate equities were again a laggard today on the busiest day of earnings season. The broad-based Equity REIT ETF (VNQ) finished higher by 0.5% with 13 of the 18 property sectors in positive territory while the Mortgage REIT ETF (REM) gained 1.8%.

This week's rally has been fueled in part by the rising likelihood of a "divided government" which reduces the prospects of significant changes to tax or regulatory policy. While this outcome appeared almost certain yesterday afternoon, the tightening race in Georgia now appears likely to send both Senate races to a run-off election in January with control of the U.S. Senate in the balance. 10 of the 11 GICS equity sectors finished in positive-territory today led by the Materials (XLB), Technology (XLK), and Financials (XLK) sectors. The Hoya Capital Housing Index also finished higher as the 30-year fixed mortgage rate hit another all-time record low last week at 2.78% on the Freddie Mac index as the housing market continues to be a bright spot of the economic recovery.

While the housing markets have continued resilience, the employment recovery had been showing signs of slowing in recent weeks, but we saw more encouraging data this morning from the Department of Labor. Initial Jobless Claims ticked lower to 751k from last week's upwardly revised 758k, the lowest week of initial claims since the pandemic began. Continuing Claims decreased to 7.28 million, down another 540k from last week. Since the peak in early May at 24.9 million, Continuing Claims have retreated by 17.6 million. The insured unemployment rate slid another 0.4 percentage points to just 4.7%, the lowest insured unemployment rate since February.

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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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