Real estate stocks lead early market rebound after Fed announces new measures

Trump is reportedly asking for $850B bailout deal

Mar.March 17, 2020 12:43 PM
Federal Reserve Chair Jerome Powell (Credit: Powell by Mark Makela/Getty Images; Xinhua/Michael Nagle via Getty Images)

Federal Reserve Chair Jerome Powell (Credit: Powell by Mark Makela/Getty Images; Xinhua/Michael Nagle via Getty Images)

Markets bounced back slightly Tuesday on news that the Federal Reserve implemented another policy to stave off the economic impact of the coronavirus, and that the Trump administration was seeking a massive stimulus package.

The Dow Jones Industrial Average was up almost 5 percent around 12:15 p.m. Tuesday, and the S&P 500 had bumped up over 6 percent.

Real estate stocks appeared to be outperforming the broader market. The FTSE Nareit All REITs index, which tracks publicly traded real estate investment stocks, was up about almost 7 percent.

Still, some major brokerages — Newmark Knight Frank, CBRE, Cushman & Wakefield — were posting losses shortly around noon. Realogy Holdings Corp.’s stock was trading at $3.7 at midday Tuesday, a drop of about 6.2 percent from market open.

The Fed Reserve said it was establishing a commercial paper funding facility — which helps boost the flow of credit for things like car loans and mortgages — that is backed by a $10 billion credit from the U.S. Treasury. The central bank said the program, created during the financial crisis over a decade ago had come under “considerable strain” because of the pandemic.

Also on Tuesday the Trump administration was reportedly asking Congress for an $850 billion stimulus package to protect against further economic decline, with about $50 billion dedicated to the airline industry. The New York Times reported that Treasury Secretary Stephen Mnuchin is talking to Congress about sending cash payments to Americans to provide assistance.

The virus has already sickened nearly 3,500 people in the U.S. and has led to 68 deaths. Around the world, deaths have surpassed 6,500.

The rapid spread of the new coronavirus, which causes COVID-19 and originated in China in December, has triggered volatility in financial markets, as companies force workers to stay out of the office and governments shut schools. Real estate has not been immune from the market panic.

Some states also have issued curfews and limited restaurants to only provide take-out and delivery services. Major retailers and malls also have announced that they are closing their doors temporarily to prevent the spread of the virus.

The turmoil has led the Federal Reserve to issue two rate cuts and a package of monetary policy measures aimed at boosting liquidity and credit. But those other recent moves, announced Sunday, did not sit well with investors. Monday saw one of the worst days for the stock market in decades. REITs in particular plunged nearly 18 percent.

Some experts have said federal assistance, particularly for the airline industry, which has been suffering from travel restrictions, is to be expected.

“The Fed pulled out a big monetary policy bazooka and fired,” Michael Knott, head of U.S. REITs research for Green Street Advisors previously told The Real Deal. “But a big fiscal policy bazooka is what’s needed more urgently, meaning targeted stimulus to more directly ease the macroeconomic shock taking place. The Fed is sort of fighting the last battle, and investors seem to be voting that the effort is futile and wasting its bazooka shots.”

Write to Mary Diduch at [email protected]

Related Articles

(Credit: iStock)

“Kicking the can down the road”: Real estate industry says $2T relief plan doesn’t do enough

(Credit: iStock)

EB-5 is back in the doghouse

Gary Barnett, Central Park Tower, and the Tel Aviv Stock Exchange Bull (Credit: Wikipedia, iStock)

Extell’s Israeli bonds put on downgrade watch

From left: Ace Watanasuparp, Mark Favaloro and Alan Rosenbaum

Watch tonight: (Work from) home lending on TRD Talks Live

San Francisco’s Oceanwide Center has a new buyer

San Francisco’s Oceanwide Center has a new buyer

Macy’s in Herald Square and CEO Jeff Gennette (Credit: Google Maps, D Dipasupil/FilmMagic)

Macy’s announces furloughs for “majority” of its workers

Almost 50,000 retail stores have closed across the country, and the restaurant industry has lost $25 billion in sales since March 1, (Credit: Getty Images)

US will see $20B in retail loans come due starting this week

Durable Capital's Henry Ellenbogen and Redfin CEO Glenn Kelman (Credit: Ellenbogen by Paul Morigi/Getty Images for The Phillips Collection; Redfin)

Redfin sells $110M stake to VC firm