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REITs in the Spotlight: Hope of Rate Cut and Strong Results Stoke Optimism REITs in the Spotlight: Hope of Rate Cut and Strong Results Stoke Optimism

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Following three consecutive weeks of decline, REITs edged slightly higher this week, buoyed by resurfacing hopes of a rate cut and robust quarterly performances from major names.

Federal Reserve Chair Jerome Powell, in a β€œ60 Minutes” episode, carefully broached the possibility of reducing interest rates amidst a robust labor market and a strong economy, where a premature slashing could fuel inflation and a delayed move could precipitate a recession.

Furthermore, the sector reverberated with positive quarterly results from industry leaders such as Healthpeak Properties (PEAK), Omega Healthcare Investors (OHI), NNN REIT (NNN), The Macerich Company (MAC), and Simon Property Group (SPG), all of whom outshone Wall Street’s average estimates.

The FTSE Nareit All Equity REITs index ticked up by 0.15% from the previous week, while the Dow Jones Equity All REIT Total Return Index rose by 0.16%. The broader Real Estate Select Sector SPDR ETF (NYSEARCA:XLRE) climbed 0.26%, standing in contrast to the FTSE NAREIT Mortgage REITs index, which tumbled by 3.02% weekly.

On a larger scale, the S&P 500 broke the historic 5,000-point barrier for the first time, surging by 1.37% and predominantly lifted by tech stocks. Among subsectors, Industrial reigned supreme with a 1.77% surge, while Diversified floundered, shedding 3.35% of its average value.

Integral to the sector’s buoyancy were notable capital returns announced this week, with Postal Realty Trust (PSTL), CBL Properties (CBL), American Assets Trust (AAT), and Weyerhaeuser (WY) declaring enhanced dividend distributions, and Simon Property Group and Rithm Capital authorizing new share buyback programs.

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