December 14, 2023 3:59pm | 3 minute read
“End 2023 strong with 3 hot ideas – virtually free”
Are you ready to take advantage of the next 32%, 39%, or 45% upside potential in today’s market? You’re about to miss the 3 latest stock ideas from stock expert Gianni Di Poce. .One that can change your entire wealth creation journey. If you’re ready to end 2023 on a high, get 12 Rising Stock Ideas every month. Act quickly.
The early arrival of the Santa Claus rally delighted the real estate sector, but it was none other than the Federal Reserve Chairman who delivered the good news. Jerome Powellhinted at the possibility of a rate cut in 2024.
This expectation, combined with the sector’s high sensitivity to changes in U.S. Treasury yields, with the 10-year yield below the 4% benchmark, has created a nice bullish wave across real estate stocks in recent trading.
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Since Wednesday’s release of the Federal Open Market Committee’s (FOMC) interest rate statement and Chairman Powell’s subsequent press conference, no sector of the S&P 500 index has seen anywhere near growth as real estate.
Market Snapshot: S&P 500 sector performance since the Fed meeting
A quick look at the performance of the S&P 500 sectors from Wednesday 2pm to Thursday 3pm reveals the following:
| ETF name | performance (%) |
|---|---|
| Real Estate Select Sector SPDR Fund (NYSE:XLRE) | +6.21% |
| Energy Select Sector SPDR Fund (NYSE:XLE) | +4.07% |
| Material Select Sector SPDR Fund (New York Stock Exchange:XLB) | +3.58% |
| Consumer Discretionary Sector SPDR Fund (New York Stock Exchange:XLY) | +3.29% |
| Industry Select Sector SPDR Fund (NYSE:XLI) | +2.67% |
| Financial Select Sector SPDR Fund (New York Stock Exchange:XLF) | +2.46% |
| Utilities Select Sector SPDR Fund (NYSE:XLU) | +1.23% |
| Telecommunications Services Select Sector SPDR Fund (New York Stock Exchange:XLC) | +1.2% |
| Healthcare Select Sector SPDR Fund (New York Stock Exchange: XLV) | +0.48% |
| Technology Select Sector SPDR Fund (NYSE:XLK) | +0.47% |
| Consumer Essentials Select Sector SPDR Fund (New York Stock Exchange:XLP) | -0.06% |
Also read: Real estate, small-cap stocks, gold mining stocks, and solar power stocks soar on prospect of Fed rate cut
Graph: Real estate has outperformed other sectors since the Fed’s dovish shift
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The following stocks are leading this week’s XLRE ETF performance.
| name | industry | Price change % (5D) |
|---|---|---|
| Prologis Co., Ltd. (New York Stock Exchange:PLD) | Industrial REIT | 14.91% |
| Boston Properties, Inc. (NYSE:BXP) | Office REIT | 13.05% |
| Extra Space Storage Co., Ltd. (NYSE:EXR) | Specialized REIT | 12.52% |
| Kimco Realty Corporation (NYSE:KIM) | Commercial REIT | 11.57% |
| Simon Property Group Co., Ltd. (NYSE: Self-propelled artillery) | Commercial REIT | 10.96% |
| Host Hotels & Resorts Co., Ltd. (New York Stock Exchange:HST) | Hotel & Resort REIT | 10.29% |
| ESSEX PROPERTY TRUST LIMITED. (NYSE:ESS) | Residential REIT | 10.28% |
| Alexandria Real Estate Equities, Inc. (NYSE:ARE) | Office REIT | 10.07% |
| CBRE Group Co., Ltd. (NYSE:CBRE) | Real estate management/development | 9.75% |
5 ETFs to get exposure to interest rate-sensitive real estate stocks
The XLRE ETF has broad coverage of the real estate sector encompassing a variety of industries including industrial, office, hotels and resorts, residential and specialty REITs.
A similar broad exposure is Vanguard Real Estate ETF (NYSE:VNQ) and iShares U.S. Real Estate ETF (NYSE:IYR), both of which have performed about the same as XLRE over the past two sessions.
In the real estate ETF space, two ETFs in particular have shown even more impressive performance.
For investors seeking exposure to U.S. REITs that hold residential and commercial loans. iShares Mortgage Real Estate ETF (NYSE:REM) is your go-to. Notably, the ETF also benefited from Thursday’s announcement from Freddie Mac, which reported that average interest rates on 30-year mortgages have fallen below 7% for the first time since August.
The REM ETF has gained 7.3% since the Fed meeting, outperforming the aforementioned funds.
Finally, there are leveraged ETFs. Direxion Daily Real Estate Bull 3X Stock (NYSE:DRN) has soared 18% over the past two sessions, suggesting a more aggressive bet on bullish developments in the real estate sector.
Read now: Best REITs to buy
Photo: International Monetary Fund on Shutterstock, Unsplash, Flickr.
“End 2023 strong with 3 hot ideas – virtually free”
Are you ready to take advantage of the next 32%, 39%, or 45% upside potential in today’s market? You’re about to miss the 3 latest stock ideas from stock expert Gianni Di Poce. .One that can change your entire wealth creation journey. If you’re ready to end 2023 on a high, get 12 Rising Stock Ideas every month. Act quickly.
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