Real estate, Utilities slump as yields spike after hot CPI

Extra Space Storage

10/04/2024 16:33

** Rate-sensitive real estate investment trusts (REITs) and
utility firms slump on Weds after hotter-than-expected inflation
data sends benchmark yields higher
    ** U.S. Treasury 10-year yield  US10YT=RR  jumps to 4.5%,
highest since Nov, and two-year yields  US2YYT=RR  rise to
around 4.9% after U.S. consumer prices increased more than
expected in March
    ** Higher rates make dividend-paying stocks, also known as
bond proxies, like REITs and utilities less attractive, and
drive up borrowing costs
    ** S&P 500 real estate index  .SPLRCR  recently down 4% to
about 2-mth low and on course for largest one-day pct drop since
June 2022
    ** Biggest SPLRCR pct losers on Weds include Extra Space
Storage  EXR.N  and Public Storage  PSA.N  both off 6%, and
telecom tower co SBA Communications  SBAC.O  and office REIT
Boston Properties  BXP.N  both down ~5%
    ** S&P Utilities  .SPLRCU  sector last down 1.8% on the
session
    ** Biggest drags on SPLRCU are Nextera Energy  NEE.N  and
Duke Energy  DUK.N  both off ~2%
    ** SPLRCR is the only major S&P sector in the red YTD, now
down 6%. SPLRCU is up 2% this year including move on Weds
    ** S&P 500  .SPX  index losing 1% on Weds, trimming 2024
gain to ~8%

 (Lance Tupper is a Reuters market analyst. The views expressed
are his own)
 ((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))