• Alex Pettee, CFA

Vaccine Inbound? | Stocks Surge | Millennial Homebuying

Updated: Sep 10, 2020

Daily Recap

  • U.S. equity markets rallied Wednesday with the major averages eclipsing all-time record highs after reports that the CDC has notified states to prepare for a vaccine as soon as early October.

  • Following gains of 0.9% yesterday and eclipsing yet another record-high, the S&P 500 finished higher by 1.5% today while the Dow Jones Industrial Average surged 455 points.

  • Coming off fractional gains yesterday, Equity REIT ETFs finished higher by 2.0% today with all 18 property sectors in positive territory. Mortgage REITs closed higher by 0.1%.

  • The strong performance came despite disappointing employment data from ADP, which estimated that private payrolls rose by 428k in August, which was below the 1.2 million expectations.

  • Mortgage applications to purchase a single-family home are now higher by 28% from last year as the housing industry continues to lead the post-pandemic recovery.

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 rallied Wednesday with the major averages eclipsing all-time record highs after reports that the Centers for Disease Control has notified states to prepare for a vaccine as soon as early October. Following gains of 0.9% yesterday and eclipsing yet another record-high, the S&P 500 ETF (SPY) finished higher by 1.5% today while the Dow Jones Industrial Average (DJI) surged 455 points. Coming off fractional gains yesterday,  Equity REIT ETFs (VNQ) finished higher by 2.0% today with all 18 property sectors in positive territory. The Mortgage REIT ETF (REM) finished higher by 0.1% after gaining 0.7% yesterday.  

Today's gains were broad-based with 10 of the 11 GICS equity sectors finishing in positive territory on the day, led by the Utilities (XLU), Materials (XLB), and Communications (XLC) sectors. The strong performance came despite disappointing employment data from ADP, which estimated that private payrolls rose by 428k in August, which was below the 1.2 million expectations. Coming off strong gains yesterday, homebuilders and the broader Hoya Capital Housing Index lagged today amid uncertainty over the impact of a newly-announced CDC regulation to pause evictions after stimulus talks broke down last month. 

Despite today's underperformance, homebuilders have been among the hottest equity market sectors over the last quarter as the industry continues to lead the early stages of the post-pandemic economic recovery. The Mortgage Bankers Association today reported that mortgage applications to purchase a single-family home are now higher by 28% from last year. Despite historically low housing inventory, millennial purchase activity continued to rise in July, according to the latest Ellie Mae Millennial Tracker. The share of all purchase loans closed to millennials reached 61% for the month, up five percentage points from June. The 30-Year Fixed Mortgage Rate with conforming loan balances stands at 3.08%, just above record-low-levels, and down 62 basis points from last year.

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