Investors were understandably eager to ring the bell on the stock market’s worst year since 2008, with the S&P 500
SPX,
-0.25%
falling 19.4%, the Dow Jones Industrial Average
DJIA,
-0.22%
dropping 8.8% and the Nasdaq Composite
COMP,
-0.11%
shedding 33.1%.
Adding to the pain, the bond market was also a disaster, with some segments seeing their biggest annual losses in history while U.S. Treasury prices slumped, sending yields soaring.
That offered a rare double whammy for investors, who usually see portfolios cushioned by bonds when equities suffer.
So now what? The flip of the calendar doesn’t make the factors that drove market losses in 2022 go away, but it offers investors an opportunity to think about how the economy and the markets will evolve in the year ahead.
A rate shock as the Federal Reserve ratcheted up interest rates at a historically rapid pace in its effort to rein in inflation set the tone in 2022. A return to higher rates — and what may be the end of a four-decade era of falling interest rates — is expected to reverberate in 2023 and beyond.
The Tell: End of 40-year era of falling interest rates is crucial ‘sea change’ for investors: Howard Marks
While inflation, still elevated, shows signs it has peaked, the market was robbed of a seasonal rally heading into the new year by fears the Fed’s continued efforts will spark a recession that will devastate corporate earnings in 2023.
Read: How a Santa Claus rally, or lack thereof, sets the stage for the stock market in first quarter
The interplay between Fed policy, inflation, economic growth and earnings will drive the market in 2023, analysts say.
The Fed
“This has been a Fed-led market that’s been predicated on inflation that was not transitory,” as monetary policy makers had initially believed, said Quincy Krosby, chief global strategist at LPL Financial, in a phone interview.
The Fed dropped the “transitory rhetoric” and launched an aggressive campaign to tackle inflation. “That’s led to a market that’s concerned about economic growth and whether we enter 2023 facing a significant economic downturn,” Krosby said.
Inflation
Investors, however, might find some optimism in signs inflation has peaked, analysts said.
“The days of sub-2% CPI that we enjoyed from ’08-’20 are likely gone, possibly for a long time. But inflation could fall far enough (3%-4%) for the Fed to essentially think it has accomplished its mission (although it won’t say it directly as the target is still 2%), but for all intents and purposes, we could exit 2023 without a material inflation problem,” said Tom Essaye, president of Sevens Report Research, in a Friday note.
Skeptics doubt that a slowdown in inflation will be sufficient to keep the Fed from following through on its indications it intends to raise the fed-funds rate above 5% and keep it there for some time.
Hedge-fund titan David Tepper in a December interview with CNBC said he was “leaning short” on the stock market “because I think the upside/downside just doesn’t make sense to me when I have so many…central banks telling me what they’re going to do.”
See: Fed officials reinforce stern message of slowing inflation by higher interest rates
Recession fears
A resilient job market so far has optimists — and Fed officials — arguing that the economy could avoid a so-called hard landing as monetary policy continues to tighten.
Also read: Stock-market investors face 3 recession scenarios in 2023
Investors, however, “are anticipating an economic recession to materialize early in 2023, as evidenced by the three quarters of projected S&P 500 index earnings declines and continued defensive sector leanings,” said Sam Stovall, chief investment strategist at CFRA, in a Wednesday note. “The severity of the recession remains in question. We expect it to be mild.”
The bear market for the S&P 500 is backdated to Jan. 3, 2022, when it closed at a record high before beginning its slide. It ended with a yearly loss of 19.4%.
“The average bear market since World War II has lasted 14 months and resulted in a decline of 35.7% from the previous high,” wrote analysts at Glenmede in a December note.
“At approximately 12 months and 20%, the current bear market appears to be close to 2/3 of the way through the typical bear-market decline. The current market appears to be following a similar trajectory of an average historical bear market so far,” they wrote. “Based on past trends, on average, bear markets do not bottom until after a recession begins, but before a recession ends.”
Related: How long will stocks stay in a bear market? It hinges on if a recession hits, says Wells Fargo Institute
Most laid off tech workers are finding jobs shortly after beginning their search, a new survey shows, as employers continue to scoop up workers in a tight labor market.
About 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search, according to a
ZipRecruiter
survey of new hires. That was just below the 83% share of all laid-off workers who were re-employed in the same time frame.
Nearly four in 10 previously laid off tech workers found jobs less than a month after they began searching, ZipRecruiter found in the survey.
“Despite the widespread layoffs, hiring freezes, and cost-cutting taking place in tech, many tech workers are finding reemployment remarkably quickly,” said
Julia Pollak,
chief economist at ZipRecruiter. “They’re still the most sought-after workers with the most in-demand skills.”
Job openings across the economy—at 10.3 million—are down from record highs but far exceed the number of unemployed Americans, providing opportunities for workers who lose their jobs and those who choose to seek another.
Workers previously employed in other industries, including entertainment and leisure, transportation and delivery, and manufacturing, also found new jobs quickly, the ZipRecruiter data showed.
The job market for tech workers is slowing as the broader economy falters under the pressure of Federal Reserve interest rate increases and high inflation. Layoffs and hiring freezes are occurring at startups and large tech companies such as Amazon.com Inc. and
Facebook
parent Meta Platforms Inc. that hired aggressively early on in the pandemic. The cuts are hitting workers in tech jobs—such as software engineers—and other corporate roles including recruiters.
Still, tech firms making cuts are outnumbered by those that are hiring.
A smaller share of tech workers is spending long periods searching for work after a layoff. About 5% of laid off tech workers who found jobs from April to October had spent more than six months hunting for work, down from 26% of those hired between August 2021 and February 2022, ZipRecruiter said.
Wen Huber, age 23, was laid off from a videographer job at a real estate tech startup in late July. Mr. Huber, who lives near Seattle, thought it would take awhile to land a new position, given he didn’t have a four-year-college degree and many other job seekers were flooding the tech job market.
“When I was applying, to be honest, I didn’t feel very confident because there was such an influx of competition with a lot of people also being laid off,” he said.
Mr. Huber had built up a savings buffer, allowing him to be more selective in his job hunt as he sought to pivot into social media. He documented his unemployment experience in a series of videos on LinkedIn. The videos helped him land an interview—and ultimately an offer—for a social media manager job at a software startup, Mr. Huber said. He started in September.
“I was surprised at how quickly I was able to secure an offer for a job,” he said.
Wen Huber landed a job offer for a social media manager position within one-and-a-half months of his layoff.
Photo:
Devon Potts
Short job searches in tech have become slightly less common as the labor market slows from earlier in the year. Among people who recently lost a job and worked in tech previously, 37% found a new position within one month of starting to look, according to ZipRecruiter. That compared with 50% in February’s survey.
“We’ve definitely seen a slowdown in hiring, but the reason why is that the job creation level was beyond record highs because of the slingshot effect of the pandemic,” said Ryan Sutton, district president at Robert Half, a global recruitment firm. “From August 2020 to May 2022, it wasn’t red-hot. It was lava-hot.”
Usually when mass layoffs hit, there is an influx of tech candidates contacting his company to help with their job search, Mr. Sutton said.
“We have not seen it yet—we haven’t seen more candidates coming to market,” he said. “Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.”
Client firms in tech also haven’t mentioned any plans to cut jobs, Mr. Sutton said.
About 74% of workers recently hired after losing or leaving a job at a tech company remained in the industry, according to ZipRecruiter. Others who previously worked at tech companies switched to firms in industries such as retail, financial services and healthcare in the six months ending in mid-October.
The recent headlines about tech layoffs don’t seem to match broader economic indicators, which show a strong job market and a historically low unemployment rate. WSJ’s Gunjan Banerji explains the disconnect. Illustration: Ali Larkin
Pinnacol Assurance, a 650-person workers’ compensation insurer, saw a 46% increase in job candidates from big tech companies including Meta, Microsoft and Twitter between September and mid-December, said Tim Johnson, the company’s chief human resources officer.
The influx of applicants has helped Pinnacol fill tech-related roles such as data scientist, machine-learning engineer and cloud architect in recent months. In mid-December, Pinnacol’s recruiting team made an offer to a job candidate from Google, Mr. Johnson said.
Ayanna Chapman, 42, started a systems-engineering job job at Pinnacol overseeing its computer systems in mid-November after she was laid off from another systems-engineer position this spring.
“‘Our recruiters are having to hunt and hustle just as much as they had to in the last couple of years.’”
— Ryan Sutton of global recruitment firm Robert Half
A generous severance package allowed her to take several months to freshen skills and study for certifications including in the Python programming language. When the Atlanta–area resident began looking for work in the second week of October, recruiters quickly reached out with interview opportunities, she said.
Ms. Chapman was keen on finding a job with stability and thought Pinnacol would fit. She received an offer from the Denver–based company about two weeks after beginning the interview process, much faster than previous experiences, she said.
“I literally cried tears of joy like, ‘Oh, my God, I got the job. I can’t believe it,’” Ms. Chapman said.
Employers broadly are responding to job candidates fast, likely for fear of losing them in a competitive market with a historically low jobless rate of 3.7%. Nine in 10 ZipRecruiter survey respondents said they heard back from a recruiter or hiring manager within a week of applying for a job.
ZipRecruiter’s most recent survey was drawn from 2,550 U.S. residents who had started a new job within the six months ending in mid-October. The data align with other job-market figures that signal the hot labor market is cooling.
Of the ZipRecruiter survey respondents who said they previously worked in tech, most of them likely worked for tech companies regardless of their occupation, Ms. Pollak said. In other words, a recruiter at Amazon would likely be classified as a tech-industry worker in the survey. But a data scientist at
Home Depot
would be a retail-industry worker.
Separate labor-market figures suggest employers across industries are still seeking to hire tech workers, though less so than earlier in the pandemic. Postings on job-site Indeed for tech occupations are still well above prepandemic levels, but have fallen steeply over the past year.
Software developer job ads on Indeed are down 34% from a year earlier, and ads for mathematics roles—which include data scientists—are 28% lower. Overall postings are down 7.7% from a year ago.
“With tech workers, it’s a much bigger pullback,” said
Nick Bunker,
an economist at Indeed Hiring Lab. “It’s still above prepandemic levels, but if the current trend keeps up, I don’t imagine that talking point will be true anymore at some point next year.”
The uncertain economic outlook is likely weighing on employers’ appetite for white-collar workers, since they tend to base hiring plans for higher-paid workers on the longer-term business outlook, said Mr. Bunker. By contrast, firms usually gear hiring for waiters, deliverers and other lower-paid jobs according to immediate business needs, he said.
Many companies with among the highest shares of new tech job postings on Indeed in late November were in industries such as consulting, financial services and aerospace.
“For tech jobs, it is still a relatively healthy economic climate and relatively healthy labor market,” said Scott Dobroski, Indeed career expert. “A lot of bright spots for tech workers currently lie outside of traditional tech companies.”
U.S. aerospace companies cut more than 100,000 workers during the pandemic, but have been hiring back at a fast clip and struggling for a year with staffing shortages that have crimped supply chains.
Raytheon Technologies Corp.
CEO
Greg Hayes
said during the summer he was optimistic that layoffs among tech companies would start to ease his own hiring challenges. There are signs that is happening.
“We are starting to see an uptick in interest from the tech layoffs,” said
Mike Dippold,
chief financial officer of
Leonardo DRS Inc.,
which is based Arlington, Va.
Mr. Dippold said the defense-sensor specialist, like many peers, still had more open positions than it would like, but the staffing situation was starting to improve.
—Doug Cameron contributed to this article.
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com and Gwynn Guilford at gwynn.guilford@wsj.com
U.S. stocks traded lower on Thursday, erasing most of their gains from their biggest rally in three weeks after a round of upbeat economic data and a warning from hedge-fund titan David Tepper that he was “leaning short” against both stocks and bonds on expectations the Federal Reserve and other central banks will continue tightening into 2023.
Positive economic news can be a negative for stocks by underlining expectations that monetary policy makers will remain aggressive in their efforts to quash inflation.
What’s happening
The Dow Jones Industrial Average
DJIA,
-1.51%
fell 472 points, or 1.4%, to 32,903.
The S&P 500
SPX,
-1.99%
shed 71 points, or 1.8%, to 3,807.
The Nasdaq Composite
COMP,
-2.84%
fell 272 points, or 2.5%, to 10,437.
A day earlier, all three major indexes recorded their best gain in three weeks as the Dow advanced 526.74 points.
What’s driving markets
Investors saw another raft of strong economic data Thursday morning, including a revised reading on third-quarter gross domestic product which showed the U.S. economy expanded more quickly than previously believed. Growth was revised up to 3.2%, up from 2.9% from the previous revision released last month.
See: Economy grew at 3.2% rate in third quarter thanks to strong consumer spending
The number of Americans who applied for unemployment benefits in the week before Christmas rose slightly to 216,000, but new filings remained low and signaled the labor market is still quite strong. Economists polled by The Wall Street Journal had forecast new claims would total 220,000 in the seven days ending Dec 17.
“Jobless claims ticking slightly up but coming in below expectations could be a sign that the Fed’s wish of a slowing labor market will have to wait until 2023. While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, in emailed comments.
“While weekly jobless claims aren’t the best indicator of the overall labor market, they have remained in a robust range these last two months suggesting the labor market remains strong and has withstood the Fed’s tightening, at least for the time being,” he wrote. “It’s no surprise to see the market take a breather today after yesterday’s rally as investors parse through earnings data, and despite some beats this week, expectations that earnings will remain as resilient in 2023 may be overblown.”
Stocks were feeling pressure after Appaloosa Management’s Tepper shared a cautious outlook for markets based on the expectation that central bankers around the world will continue hiking interest rates.
“I would probably say I’m leaning short on the equity markets right now because the upside-downside doesn’t make sense to me when I have so many people, so many central banks, telling me what they are going to do, what they want to do, what they expect to do,” Tepper said in a CNBC interview.
Key Words: Billionaire investor David Tepper would ‘lean short’ on stock market because central banks are saying ‘what they’re going to do’
A day earlier, the Conference Board’s consumer confidence survey came in at an eight-month high, which helped stoke a rally in stocks initially spurred by strong earnings from Nike Inc. and FedEx Corp. released Tuesday evening. This optimistic outlook helped stocks clinch their best daily performance in three weeks.
Volumes are starting to dry up as the year winds down, making markets more susceptible to bigger moves. According to Dow Jones Market Data, Wednesday saw the least combined volume on major exchanges since Nov. 29.
Read: Is the stock market open on Monday after Christmas Day?
In other economic data news, the U.S. leading index fell a sharp 1% in November, suggesting that the U.S. economy is heading toward a downturn.
Many market strategists are positioned defensively as they expect stocks could tumble to fresh lows in the new year.
See: Wall Street’s stock-market forecasts for 2022 were off by the widest margin since 2008: Will next year be any different?
Katie Stockton, a technical strategist at Fairlead Strategies, warned clients in a Thursday note that they should brace for more downside ahead.
“We expect the major indices to remain firm next week, helped by oversold conditions, but would brace for more downside in January given the recent downturn,” Stockton said.
Others said the latest data and comments from Tepper have simply refocused investors on the fact that the Fed, European Central Bank and now the Bank of Japan are preparing to continue tightening monetary policy.
“Yesterday was the short covering rally, but the bottom line is the trend is still short and we’re still fighting the Fed,” said Eric Diton, president and managing director of the Wealth Alliance.
Single-stock movers
AMC Entertainment Holdings
AMC,
-14.91%
was down sharply after the movie theater operator announced a $110 million equity capital raise.
Tesla Inc.
TSLA,
-8.18%
shares continued to tumble as the company has been one of the worst performers on the S&P 500 this year.
Shares of Verizon Communications Inc.
VZ,
-0.53%
were down again on Thursday as the company heads for its worst year on record.
Shares of CarMax Inc.
KMX,
-6.60%
tumbled after the used vehicle seller reported fiscal third-quarter profit and sales that dropped well below expectations.
Chipmakers and suppliers of equipment and materials, including Nvidia Corp.
NVDA,
-8.60%, Advanced Micro Devices
AMD,
-7.17%
and Applied Materials Inc.
AMAT,
-8.54%,
were lower on Thursday.
TOKYO—The Bank of Japan made a surprise decision to let a benchmark interest rate rise to 0.5% from 0.25%, pushing the yen higher and ending a long period in which it was the only major central bank not to increase rates.
The
BOJ
said the yield on the 10-year Japanese government bond could rise as high as 0.5% from a previous cap of 0.25%. The central bank has set a target range around zero for the benchmark government bond yield since 2016 and used that as a tool to keep overall market interest rates low.
The 10-year yield, which had been stuck around 0.25% for months because of the central bank cap, quickly moved up to 0.46% in afternoon trading.
The yen rose in tandem. In Tuesday afternoon trading in Tokyo, one dollar bought between 133 and 134 yen, compared with more than 137 yen before the BOJ’s decision.
The Nikkei Stock Average, which had been slightly higher in the morning, was down more than 2% as investors digested the possibility that companies would have to pay higher interest on their debt. Also, the weak yen has pushed up profits for many exporters, so a stronger yen could be negative for stocks.
Gov.
Haruhiko Kuroda,
who is nearing the end of 10 years in office, is known for making moves that surprise the market, although he had made fewer of them in recent years.
Market players had anticipated that time might be running out on the Bank of Japan’s low-rate policy, but they generally didn’t expect Mr. Kuroda to move at the year’s final policy meeting.
The Bank of Japan’s statement on its decision Tuesday didn’t mention inflation as a reason to let the yield on government bonds rise as high as 0.5%. Instead, it cited the deteriorating functioning of the government bond market and discrepancies between the 10-year government bond yield and the yield on bonds with other maturities.
The bank said Tuesday’s move would “facilitate the transmission of monetary-easing effects,” suggesting it didn’t want the decision to be interpreted as monetary tightening.
The move is “a small step toward an exit” from monetary easing, said
Mitsubishi UFJ Morgan Stanley Securities
strategist Naomi Muguruma.
Ms. Muguruma said the BOJ needed to narrow the gap between its cap on the 10-year yield and where the yield would stand if market forces were given full rein.
“Otherwise magma for higher yields could build up, causing the yield to rise sharply when the BOJ actually unwinds easing,” she said.
Japan’s interest rates are still low compared with the U.S. and Europe, largely because its inflation rate hasn’t risen as fast. The Federal Reserve last week raised its benchmark federal-funds rate to a range between 4.25% and 4.5%—a 15-year high—while the European Central Bank said it would raise its key rate to 2% from 1.5%.
In the U.S., inflation has started to slow down recently but is still running above 7%. In Japan, consumer prices in October were 3.7% higher than they were a year earlier.
Japan has seen prices rise like other countries, owing to the impact of the war in Ukraine as well as the yen’s weakness. However, the pace of inflation is milder in Japan, where consumers tend to be highly price sensitive.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
A stock-market paradox, in which bad news about the economy is seen as good news for equities, may have run its course. If so, investors should expect bad news to be bad news for stocks heading into the new year — and there may be plenty of it.
But first, why would good news be bad news? Investors have spent 2022 largely focused on the Federal Reserve and its rapid series of large rate hikes aimed at bringing inflation to heel. Economic news pointing to slower growth and less fuel for inflation could serve to lift stocks on the idea that the Fed could begin to slow the pace or even begin entertaining future rate cuts.
Conversely, good news on the economy could be bad news for stocks.
So what’s changed? The past week saw a softer-than-expected November consumer-price index reading. While still running mighty hot, with prices rising more than 7% year over year, investors are increasingly confident that inflation likely peaked at a roughly four-decade high above 9% in June.
See: Why November’s CPI data are seen as a ‘game-changer’ for financial markets
But the Federal Reserve and other major central banks indicated they intend to keep lifting rates, albeit at a slower pace, into 2023 and likely keep them elevated longer than investors had anticipated. That’s stoking fears that a recession is becoming more likely.
Meanwhile, markets are behaving as if the worst of the inflation scare is in the rearview mirror, with recession fears now looming on the horizon, said Jim Baird, chief investment officer of Plante Moran Financial Advisors.
That sentiment was reinforced by manufacturing data Wednesday and a weaker-than-expected retail sales reading on Thursday, Baird said, in a phone interview.
Markets are “probably headed back to a period where bad news is bad news not because rates will be driving concerns for investors, but because earnings growth will falter,” Baird said.
A ‘reverse Tepper trade’
Keith Lerner, co-chief investment officer at Truist, argued that a mirror image of the backdrop that produced what became known as the “Tepper trade,” inspired by hedge-fund titan David Tepper in September 2010, may be forming.
Unfortunately, while Tepper’s prescient call was for a “win/win scenario.” the “reverse Tepper trade” is shaping up as a lose/lose proposition, Lerner said, in a Friday note.
Tepper’s argument was that the economy was either going to get better, which would be positive for stocks and asset prices. Or, the economy would weaken, with the Fed stepping in to support the market, which would also be positive for asset prices.
The current setup is one in which the economy is going to weaken, taming inflation but also denting corporate profits and challenging asset prices, Lerner said. Or, instead, the economy remains strong, along with inflation, with the Fed and other central banks continuing to tighten policy, and challenging asset prices.
“In either case, there’s a potential headwind for investors. To be fair, there is a third path, where inflation comes down, and the economy avoids recession, the so-called soft landing. It’s possible,” Lerner wrote, but noted the path to a soft landing looks increasingly narrow.
Recession jitters were on display Thursday, when November retail sales showed a 0.6% fall, exceeding forecasts for a 0.3% decline and the biggest drop in almost a year. Also, the Philadelphia Fed’s manufacturing index rose, but remained in negative territory, disappointing expectations, while the New York Fed’s Empire State index fell.
Read: Still a bear market: S&P 500 slump signals stocks never reached ‘escape velocity’
Stocks, which had posted moderate losses after the Fed a day earlier lifted interest rates by half a percentage point, tumbled sharply. Equities extended their decline Friday, with the S&P 500
SPX,
-1.11%
logging a 2.1% weekly loss, while the Dow Jones Industrial Average
DJIA,
-0.85%
shed 1.7% and the Nasdaq Composite
COMP,
-0.97%
dropped 2.7%.
“As we move into 2023, economic data will become more of an influence over stocks because the data will tell us the answer to a very important question: How bad will the economic slowdown get? That’s the key question as we begin the new year, because with the Fed on relative policy ‘auto pilot’ (more hikes to start 2023) the key now is growth, and the potential damage from slowing growth,” said Tom Essaye, founder of Sevens Report Research, in a Friday note.
Recession watch
No one can say with complete certainty that a recession will occur in 2023, but it seems there’s no question corporate earnings will come under pressure, and that will be a key driver for markets, said Plante Moran’s Baird. And that means earnings have the potential to be a significant source of volatility in the year ahead.
“If in 2022 the story was inflation and rates, for 2023 it’s going to be earnings and recession risk,” he said.
It’s no longer an environment that favors high-growth, high risk equities, while cyclical factors could be setting up nicely for value-oriented stocks and small caps, he said.
Truist’s Lerner said that until the weight of the evidence shifts, “we maintain our overweight in fixed income, where we are focused on high quality bonds, and a relative underweight in equities.”
Within equities, Truist favors the U.S., a value tilt, and sees “better opportunities below the market’s surface,” such as the equal-weighted S&P 500, a proxy for the average stock.
Highlights of the economic calendar for the week ahead include a revised look at third-quarter gross domestic product on Thursday, along with the November index of leading economic indicators. On Friday, November personal consumption and spending data, including the Fed’s preferred inflation gauge are set for release.
WASHINGTON—Congressional leaders are set to return to the Capitol on Monday under pressure to negotiate a spending bill that would fund the federal government’s operations beyond Friday.
Negotiators have days to reach a deal on a full-year spending bill or pass a short-term measure delaying the deadline to avoid a partial government shutdown. To reach a longer-term deal, they will have to break the partisan deadlock between Republicans and Democrats, who are split over $26 billion in nondefense spending.
Republicans say that Democrats want big increases for entities such as the Internal Revenue Service that they say are already flush with cash. Democrats say their funding priorities, such as funding veterans’ healthcare, are critical.
SHARE YOUR THOUGHTS
What steps would you like Congress to take on pending legislation? Join the conversation below.
Democrats in the U.S. Senate need to convince at least 10 Republicans to agree to advance a spending bill with the 60 votes needed. In the House of Representatives, a spending bill can be passed with a simple majority.
Few other items remain on the congressional agenda before new lawmakers take over for the next session, which begins on Jan. 3. Lawmakers who see the spending bill as the last major piece of legislation to pass are also lobbying hard for negotiators to include other measures they see as top priorities.
Some lawmakers want the spending bill to include the Electoral Count Act, which would change an 1887 law governing how Congress deals with presidential-election disputes. The bill has been pitched as a way to prevent a repeat of what happened following the 2020 election when then-President
Donald Trump
pressured his vice president,
Mike Pence,
to reject the Electoral College votes from some states. Mr. Pence declined to do so.
Other lawmakers are trying to include a measure that would extend a Dec. 27 deadline for
Boeing Co.
to secure federal safety approvals for two new versions of the 737 MAX airplane. The company was required by law to install new cockpit-alerting systems to help pilots resolve emergencies in the wake of two deadly crashes.
Boeing has said it might cancel two new versions of one of its airplanes if it doesn’t get an extension on a safety-approval deadline.
Photo:
JASON REDMOND/REUTERS
The deadline was set by Congress two years ago, but Federal Aviation Administration approvals have taken longer than expected. Without an extension, Boeing said in a securities filing that it might cancel both planes, exposing it to losses of potentially tens of billions of dollars.
Sen.
Roger Wicker
(R., Miss.), the top Republican on the Senate committee that oversees transportation issues, said he was hopeful that an extension would be included in a spending bill.
“I think it’s a reasonable ask,” he said last week.
Lawmakers could also include a provision that would shield banks from penalties if they handle marijuana-related transactions.
Banks that do business with the cannabis industry risk losing their federal banking charters because marijuana, despite being legal in some states, remains illegal on a federal level. As a result, some marijuana businesses are excluded from credit-card processing and rely heavily on cash to operate, making them targets for robberies.
Sen.
Joe Manchin
(D., W.Va.) could look toward the spending bill as a way to pass a measure that would speed up environmental reviews of major energy projects, including natural-gas pipelines, electricity transmission lines, wind farms and solar-power installations.
Sens.
Martin Heinrich
(D., N.M.) and
Roy Blunt
(R., Mo.) are pushing to include a measure that would steer federal money toward projects to restore habitats for struggling species.
Sen. Joe Manchin (D., W.Va.) could press for changes to environmental reviews for energy projects.
Photo:
SARAH SILBIGER/REUTERS
The measure would fund state conservation plans, which are federally required strategies and wish lists that wildlife agency officials keep on struggling animal, fish and plant populations they monitor. Those plans say more than 12,000 species need conservation help because of extreme weather, habitat loss, invasive species and disease. Such plans received unstable funding in the past.
“Without enough resources, wildlife agencies have been forced to pick and choose which species are worth saving,” Mr. Heinrich said in a statement.
Senate lawmakers are expected this week to pass a defense policy bill that authorizes U.S. military leaders to purchase new weapons and increase pay for troops, and lifts a requirement for members of the military to get vaccinated against Covid-19.
Newsletter Sign-up
What’s News
Catch up on the headlines, understand the news and make better decisions, free in your inbox every day.
The annual National Defense Authorization Act would increase America’s total national security budget for fiscal year 2023 to $857.9 billion. House lawmakers passed the NDAA bill on Thursday with 350 votes in favor and 80 votes against it.
Republicans had pushed for the bill to end the Defense Department’s Covid-19 vaccine rule, arguing that scrapping it would help recruitment and prevent the loss of additional troops whose departures have left the U.S. military weaker.
Katherine Kuzminski,
a senior fellow and program director on military, veterans and society issues for the Center for a New American Security, a military think tank, said it is hard to assess whether vaccine-related discharges have hurt the U.S. military’s capability because it is unclear whether the people who left worked in high-profile, hard-to-fill specialized positions or whether they were easily replaceable.
On recruitment, she said that younger people who are weighing military service “are less likely to make decisions regarding military recruitment based on political debates.”
Stocks wavered after producer-price data came in hotter than expected, disappointing investors who had hoped for signs of easing inflation before the Federal Reserve’s meeting next week.
The S&P 500 was flat on Friday morning, while the Dow Jones Industrial Average lost 0.1%. The technology-focused Nasdaq Composite rose 0.2%.
The producer-price index, which measures what suppliers are charging businesses and other customers, climbed 0.3% in November compared with the previous month, the Labor Department said Friday morning, the same as October’s revised 0.3% increase. Economists surveyed by The Wall Street Journal had expected U.S. supplier prices to increase 0.2% for November.
Investors had been hopeful that the inflation reading would offer evidence that price pressures in the U.S. are abating and would help solidify a smaller interest-rate increase next week. The Fed will make its next interest-rate decision on Wednesday, and the PPI data—combined with consumer-price data Tuesday—are expected to factor heavily into the trajectory of interest rates over the coming months.
Stock futures, which had traded higher throughout the morning, turned lower after the data’s release. Yields on U.S. government bonds rose, also reversing their performance earlier in the day.
In recent days, investors have grown increasingly worried that elevated inflation will force the Fed to keep lifting rates to higher levels than once expected, potentially pushing the U.S. economy into a recession.
“Even though the market sometimes seems to ignore Powell, thinking he’s bluffing, he keeps reiterating that he will put this economy into a recession if he has to,” said Eric Sterner, referring to Fed chairman
Jerome Powell.
Mr. Sterner, chief investment officer at Apollon Wealth Management, said he expects markets could retest their recent lows in the first and second quarter of next year.
“We’re stuck in this rut right now waiting for inflation to normalize and it may take all of next year for that to happen,” he said.
Those concerns about how high interest rates might go—and how they will affect the economy—have led to choppy trading in U.S. stocks recently and interrupted a rally that began in October. All three major U.S. indexes are on pace to end the week with losses, breaking a two-week winning streak. As of Thursday, the S&P 500 had fallen 2.7% for the week.
“The markets are so sensitive to this right now,” said Susannah Streeter, senior investment and markets analyst at
Hargreaves Lansdown.
“Although supersized rate hikes are probably in the rearview mirror, it’s about how long more gradual rate increases will continue for, and that’s why you’ve got these twin evils looming: recession and high inflation. That’s the real concern—that we’ll get a stagflation scenario.”
The S&P 500 on Thursday snapped a five-day losing streak.
Photo:
BRENDAN MCDERMID/REUTERS
Yields on government bonds rose, with the yield on the benchmark 10-year U.S. Treasury note climbing to 3.525%, from 3.492% Thursday. The yield on the two-year note, which is more sensitive to near-term interest-rate expectations, rose to 4.332%. Yields rise when bond prices fall.
Brent crude, the international benchmark for oil prices, climbed 1.1% to $77 a barrel, on pace to possibly break a six-session losing streak that amounted to its longest since August 2021. Oil prices have slumped recently amid concerns that slowing economic growth will impede demand for fuel. Both Brent and its U.S. counterpart WTI—both of which reached eye-popping heights this year—are now trading lower on a year-to-date basis.
Outsize market moves have followed the release of inflation data in recent months.
“When CPI comes out slightly above or slightly below, you get massive market action,” said Brandon Pizzurro, director of public investments at GuideStone Capital Management. “Those of us that are defensively positioned are either going to really benefit from next Tuesday and Wednesday, or feel some short term pain if this Santa Claus rally is kickstarted.”
In China, major indexes climbed amid a sharp rise in property stocks. Hong Kong’s Hang Seng rose 2.3%. In mainland China, the Shanghai Composite added 0.3%, helping it notch its sixth consecutive week of gains. Japan’s Nikkei 225 gained 1.2%.
In Europe, the pan-continental Stoxx Europe 600 rose 0.4%.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Jack Pitcher at jack.pitcher@wsj.com
Fed officials have warned in recent days that they are likely to lift rates to and hold them at levels high enough to slow economic activity and hiring to bring inflation down from 40-year highs.
The employment report showed continued strong hiring and brisk wage growth, which is a source of concern to Fed officials because they are trying to slow both trends to prevent higher prices and wages from growing embedded across the economy.
SHARE YOUR THOUGHTS
How would you rate the Fed’s response to inflationary pressure? Join the conversation below.
Employers added 263,000 jobs in November and the unemployment rate held steady at 3.7%. But revised wage data released Friday could concern Fed officials because it points to an acceleration in pay gains in recent months.
For the three months through November, average hourly earnings rose at a 5.8% annualized rate, the Labor Department said Friday. That is up from an initially reported 3.9% annualized rate for the three months ended October.
At the same time, senior Fed officials have clearly signaled their expectation that they can cool the pace of rate rises at their Dec. 13-14 meeting, ending an unprecedented string of 0.75-point rate rises at their past four meetings.
The Fed raised its benchmark federal-funds rate last month to a range between 3.75% and 4%, and officials have signaled they are on track to continue raising it to at least around 5% by next spring.
Federal Reserve Chair Jerome Powell said at a Brookings Institution event that the central bank is prepared to slow the pace of rate rises as soon as its December meeting. Photo: Valerie Plesch/Bloomberg News
The Fed’s preferred inflation gauge, the personal-consumption-expenditures price index, rose 6% in October from a year ago. Excluding volatile food and energy categories, the so-called core PCE index rose 5%. Economists often look at core inflation as a better gauge of underlying price pressures. The Fed targets 2% inflation over time.
Current pay gains are around 1.5 to 2 percentage points above what would be consistent with the Fed’s 2% target, Fed Chair
Jerome Powell
said during a moderated discussion on Wednesday.
“We want wages to go up. We want wages to go up strongly,” he said. “But they’ve got to go up at a level that is consistent with 2% inflation over time.”
Mr. Powell said it was possible prices that rose sharply over the last two years, including housing costs and goods such as used cars, could decline in the coming year. But he signaled concern that inflation might ease to levels that are still too high. “Despite some promising developments, we have a long way to go” in bringing down inflation.
Newsletter Sign-up
Real Time Economics
The latest economic news, analysis and data curated weekdays by WSJ’s Jeffrey Sparshott.
Mr. Powell and several of his colleagues have said they don’t believe wage growth played the primary role in driving up prices. But they are concerned that strong demand for labor and high inflation could create conditions that lead paychecks and prices to move higher in lockstep, which economists sometimes call a wage-price spiral.
“When you get to that point, you’re in serious trouble,” Mr. Powell said Wednesday. “We don’t think we’re at that point. But it can’t be that we can go on for five years at very high levels of inflation and that doesn’t work its way into the wage- and price-setting process pretty quickly.”
Fed officials have signaled they are entering a new phase of raising interest rates after having lifted them at the fastest pace since the early 1980s. Now, they are trying to determine more carefully how high rates will need to go and for how long to lower inflation.
Mr. Powell outlined two possible strategies. One would be to quickly raise interest rates well above the 4.5% to 5% level that many officials thought in September would be appropriate. Another would be to “go slower and feel your way a little bit to what we think is the right level” and “to hold on longer at a high level and not loosen policy too early.”
Mr. Powell indicated he and his colleagues were more comfortable with the second strategy because they don’t want to cause unnecessary damage to the economy. “We do not want to over tighten because cutting rates is not something we want to do soon,” he said. “So that’s why we’re slowing down and going to find our way to what the right level is.”
The November payrolls gain compared with an upwardly revised 284,000 jobs in October, the Labor Department said Friday. Payrolls grew in leisure and hospitality, healthcare and government. Retailers and transportation-and-warehousing companies cut jobs in a sign of weak holiday hiring.
Average hourly earnings grew 5.1% in November from a year earlier, the department said. Wage growth has remained elevated but roughly stable after a sharp increase earlier in the year.
November job growth was roughly in line with the previous three months, when payrolls grew an average of 282,000 a month. Job growth continues to exceed the 2019 monthly average of 164,000, though gains have slowed from the first half of the year.
The job market has remained resilient this year, with employers still seeking to hire despite an uncertain economic outlook and elevated recession fears. Low unemployment and wage gains have helped fuel consumer spending, the economy’s main engine.
One big question is how long that strength can last as the Federal Reserve aggressively raises interest rates to tame inflation. Some companies in technology, entertainment and real estate are laying off workers, but demand for workers continues to outpace the number of unemployed people looking for work.
Economists are concerned that higher interest rates will trigger more widespread layoffs and a recession in the next year, as has typically occurred during prior episodes of rapid rate rises. They are closely monitoring the pace of hiring for early signs of shifts in labor-market momentum.
“An employer is going to start reducing hiring long before they start letting go of their existing workforce,” said Guy Berger, principal economist at LinkedIn. “That’s the first lever.”
Rising unemployment could follow, he said, as job seekers have fewer available opportunities. Continuing claims, which reflect the number of people seeking ongoing unemployment benefits, are drifting upward in a sign of labor-market cooling, Mr. Berger said.
On Wednesday, Federal Reserve Chair
Jerome Powell
indicated the central bank is on track to raise interest rates by a half-percentage point at its next meeting, scaling back from an unprecedented series of four 0.75-point rate rises. Fed officials are hoping higher rates will trigger less competition for workers and slower wage increases, taking some pressure off consumer prices.
This week, CNN said it was laying off employees and DoorDash Inc. said it would trim its corporate staffing levels by about 1,250. AMC Networks Inc. said in a memo to employees that it plans to lay off about 20% of its U.S. workforce.
Corporate layoff announcements generally have been concentrated in the technology industry and sectors of the economy sensitive to interest rates such as housing and finance. Other businesses are quickly scooping up laid-off workers as job openings remain well above prepandemic levels, even in sectors such as real estate.
LodeStar Software Solutions, a small software company that helps mortgage lenders accurately disclose fees to consumers, recently posted an opening for a customer-service role, said Jim Paolino, chief executive of the Conshohocken, Pa.-based company.
Mr. Paolino quickly received about 130 résumés for the job, which entails account management. He held screening calls with 10 applicants, eight of whom had lost their jobs at mortgage companies.
“It’s actually a great time to hire right now,” he said. “There has been an influx of talent in our industry and to the market because a lot of larger companies have done pretty large-scale layoffs.”
Companies are still largely avoiding job cuts because demand for goods and services is solid. Personal spending increased 0.8% from the prior month, the Commerce Department said Thursday.
Some firms also are hesitant to lay off employees because they found it so difficult to rehire as the economy recovered from the pandemic downturn.
The layoff announcements just keep coming. As interest rates continue to climb and earnings slump, WSJ’s Dion Rabouin explains why we can expect to see a bigger wave of layoffs in the near future. Illustration: Elizabeth Smelov
“Demand restarted, and they couldn’t hire fast enough,” said
Becky Frankiewicz,
president and chief commercial officer of staffing firm
ManpowerGroup.
“There’s still this aftershock of, ‘I want to hold on to the talent that I have.’”
Companies are still offering hiring bonuses to attract talent, but the rationale has shifted some from a year ago. Employers are expecting inflation to come down and bonuses give them more flexibility to dial back compensation than wage increases do, she said.
“If you still have a talent shortage and you don’t want to lock in at higher wages across all your roles, what do you do? You do bonuses,” Ms. Frankiewicz said.
Wage growth has cooled in recent months but remains above the prepandemic pace.
Still, there are signs that spending could be reaching a limit, with some Americans dipping into savings or taking on credit-card debt to finance purchases. The personal-saving rate was 2.3% in October, its lowest level since 2.1% in July 2005.
David Blake, president of Iowa-based Blue-9 Pet Products, said sales have been roughly flat this year, a shift from previous years when the 10-person manufacturer and seller of dog-training accessories posted double-digit sales growth.
Pet owners appear to be cutting back on some discretionary purchases as they face higher prices for staples like groceries, he said.
“Whether we’re in a recession or going to have a recession or not, the fact still remains that the inflation out there is having an impact on spending,” said Mr. Blake.
Write to Sarah Chaney Cambon at sarah.chaney@wsj.com
Due to slower sales, Mr. Blake held off on hiring new employees this year. He also doesn’t plan to add any next year.
Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.
Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.
REIT prices may turn a corner in 2023
REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.
And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.
During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.
When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”
Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates
In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
SPX,
-0.50%
has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.
REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.
The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.
Industry numbers
The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.
The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.
FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.
The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.
Screen of high-yielding equity REITs
For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.
Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.
This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.
For a broad screen of equity REITs, we began with the Russell 3000 Index
RUA,
-0.18%,
which represents 98% of U.S. companies by market capitalization.
We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.
If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.
For example, if we look at Vornado Realty Trust
VNO,
+1.01%,
the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.
Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.
Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:
Company
Ticker
Dividend yield
Estimated 2023 AFFO yield
Estimated “headroom”
Market cap. ($mil)
Main concentration
Brandywine Realty Trust
BDN,
+1.82%
11.52%
12.82%
1.30%
$1,132
Offices
Sabra Health Care REIT Inc.
SBRA,
+2.02%
9.70%
12.04%
2.34%
$2,857
Health care
Medical Properties Trust Inc.
MPW,
+1.90%
9.18%
11.46%
2.29%
$7,559
Health care
SL Green Realty Corp.
SLG,
+2.18%
9.16%
10.43%
1.28%
$2,619
Offices
Hudson Pacific Properties Inc.
HPP,
+1.55%
9.12%
12.69%
3.57%
$1,546
Offices
Omega Healthcare Investors Inc.
OHI,
+1.30%
9.05%
10.13%
1.08%
$6,936
Health care
Global Medical REIT Inc.
GMRE,
+2.03%
8.75%
10.59%
1.84%
$629
Health care
Uniti Group Inc.
UNIT,
+0.28%
8.30%
25.00%
16.70%
$1,715
Communications infrastructure
EPR Properties
EPR,
+0.62%
8.19%
12.24%
4.05%
$3,023
Leisure properties
CTO Realty Growth Inc.
CTO,
+1.58%
7.51%
9.34%
1.83%
$381
Retail
Highwoods Properties Inc.
HIW,
+0.76%
6.95%
8.82%
1.86%
$3,025
Offices
National Health Investors Inc.
NHI,
+1.90%
6.75%
8.32%
1.57%
$2,313
Senior housing
Douglas Emmett Inc.
DEI,
+0.33%
6.74%
10.30%
3.55%
$2,920
Offices
Outfront Media Inc.
OUT,
+0.70%
6.68%
11.74%
5.06%
$2,950
Billboards
Spirit Realty Capital Inc.
SRC,
+0.72%
6.62%
9.07%
2.45%
$5,595
Retail
Broadstone Net Lease Inc.
BNL,
-0.93%
6.61%
8.70%
2.08%
$2,879
Industial
Armada Hoffler Properties Inc.
AHH,
-0.08%
6.38%
7.78%
1.41%
$807
Offices
Innovative Industrial Properties Inc.
IIPR,
+1.09%
6.24%
7.53%
1.29%
$3,226
Health care
Simon Property Group Inc.
SPG,
+0.95%
6.22%
9.55%
3.33%
$37,847
Retail
LTC Properties Inc.
LTC,
+1.09%
5.99%
7.60%
1.60%
$1,541
Senior housing
Source: FactSet
Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.
Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.
Largest REITs
Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:
Company
Ticker
Dividend yield
Estimated 2023 AFFO yield
Estimated “headroom”
Market cap. ($mil)
Main concentration
Prologis Inc.
PLD,
+1.29%
2.84%
4.36%
1.52%
$102,886
Warehouses and logistics
American Tower Corp.
AMT,
+0.68%
2.66%
4.82%
2.16%
$99,593
Communications infrastructure
Equinix Inc.
EQIX,
+0.62%
1.87%
4.79%
2.91%
$61,317
Data centers
Crown Castle Inc.
CCI,
+1.03%
4.55%
5.42%
0.86%
$59,553
Wireless Infrastructure
Public Storage
PSA,
+0.11%
2.77%
5.35%
2.57%
$50,680
Self-storage
Realty Income Corp.
O,
+0.26%
4.82%
6.46%
1.64%
$38,720
Retail
Simon Property Group Inc.
SPG,
+0.95%
6.22%
9.55%
3.33%
$37,847
Retail
VICI Properties Inc.
VICI,
+0.41%
4.69%
6.21%
1.52%
$32,013
Leisure properties
SBA Communications Corp. Class A
SBAC,
+0.59%
0.97%
4.33%
3.36%
$31,662
Communications infrastructure
Welltower Inc.
WELL,
+2.37%
3.66%
4.76%
1.10%
$31,489
Health care
Digital Realty Trust Inc.
DLR,
+0.69%
4.54%
6.18%
1.64%
$30,903
Data centers
Alexandria Real Estate Equities Inc.
ARE,
+1.38%
3.17%
4.87%
1.70%
$24,451
Offices
AvalonBay Communities Inc.
AVB,
+0.89%
3.78%
5.69%
1.90%
$23,513
Multifamily residential
Equity Residential
EQR,
+1.10%
4.02%
5.36%
1.34%
$23,503
Multifamily residential
Extra Space Storage Inc.
EXR,
+0.29%
3.93%
5.83%
1.90%
$20,430
Self-storage
Invitation Homes Inc.
INVH,
+1.58%
2.84%
5.12%
2.28%
$18,948
Single-family residental
Mid-America Apartment Communities Inc.
MAA,
+1.46%
3.16%
5.18%
2.02%
$18,260
Multifamily residential
Ventas Inc.
VTR,
+1.63%
4.07%
5.95%
1.88%
$17,660
Senior housing
Sun Communities Inc.
SUI,
+2.09%
2.51%
4.81%
2.30%
$17,346
Multifamily residential
Source: FactSet
Simon Property Group Inc.
SPG,
+0.95%
is the only REIT to make both lists.
