Real estate stocks rally on strong May jobs report
Property and hotel share prices are beating broader market gains
Stock markets rallied on Friday following much stronger job gains in May than were expected, with many real estate companies beating the day’s market gains.
Economists surveyed by the Wall Street Journal had predicted a loss of 8.3 million jobs last month. Instead, the economy added 2.5 million, helping push the Nasdaq to a near-record high, up 2 percent on the day, almost overcoming its coronavirus losses. The S&P 500 closed 2.6 percent higher, and Dow Jones closed 3.15 percent up on the day. That’s the highest those indices have reached since late February, when uncertainty over the pandemic caused them to nosedive.
Investors appear to be predicting a V-shaped recovery in which pent-up demand coupled with businesses reopening can help return the economy to a time — just three months ago — before 22.1 million jobs were lost and unemployment reached its highest level since the Great Depression.
Real estate’s gains reflect the optimism investors feel over a return to business as usual, especially in the hard-hit industries of leisure and hospitality, retail and construction.
Simon Property Group’s share price was up 15 percent Friday alone, notching an incredible gain of 53 percent this week. Brookfield Property, the nation’s largest operator of shopping malls, saw the price of its stock rise 7 percent Friday and 23 percent on the week. Cushman & Wakefield beat the Nasdaq today by 3 percentage points, and 21 percentage points over the week.
Sharp climbs this week, however, underscore the depth of losses suffered since the coronavirus hit the U.S. economy. The price per share for Simon, Brookfield and Cushman all remain nearly 30 percent below where they were in early March.
Still, gains in real estate stocks followed an increase of 1.2 million jobs in the leisure and hospitality industry in May, and gains in the construction industry beat back almost half its decline in April.
Even hotels, which according to the Department of Labor have collectively let go 1.1 million people since February, and continued losing jobs in May, saw a rise in the price of company stock. Marriott was up 3 percent at the end of the day, and 22 percent over the week. Meanwhile, Hilton Worldwide gained 1 percent on the day, and 7 percent on the week. Overall, hotel fundamentals in the U.S. have improved since March, with occupancy seeing seven weeks of consecutive growth.
Economists cited by the Journal say the market gains come with a caveat. The trillions of dollars in federal spending buoying the economy will run out in the middle of the summer. Then, the success of America’s economic reopening — pending a second wave of coronavirus infections that may force another shutdown — will come more clearly into view.
Contact Orion Jones at firstname.lastname@example.org