REITs, Broader Market Fall After Trump Nixes COVID Relief Talks Despite Powell Warning

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Some of the market’s largest publicly-traded real estate investment trusts (REITs), in lockstep with the broader market, ended the day down after President Donald Trump tweeted this afternoon that he was putting an end to COVID-19 relief talks until after the election. 

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Trump’s abrupt announcement came just a few hours after U.S. Federal Reserve Chair Jerome Powell warned on a virtual panel that a lack of stimulus relief from the government could weaken a recovery from the pandemic, create “unnecessary hardship,” and possibly wipe out any economic and socioeconomic progress that had been made in the last several years. 

After Trump’s tweets, which came just over an hour before market close, the Dow Jones and S&P 500 instantly fell sharply and ended the day down 375.88 (or 1.34 percent) and 47.68 (1.4 percent), respectively.

Several major REIT stocks such as Vornado Realty Trust, Simon Property Group, SL Green Realty Corp. and Boston Properties experienced sudden pricing drops following the tweets, but only two — Boston Properties and Vornado — ended the day down. 

Overall, U.S. equity REITs — which are seen as stable and defensive investments — followed the same trajectory as the broader market, facing a sudden drop and ending the day down. U.S. equity REITs ended down 0.4 percent after having a strong trading day leading up to Trump’s tweets at 2:48 p.m. Eastern Standard Time, as per information from the MSCI US REIT Index. 

In his tweets, Trump said he was nixing relief talks until after the election and redirecting Senate Majority Leader Mitch McConnell and Republicans to focus solely on placing U.S. Supreme Court nominee Amy Coney Barrett on the bench. 

Just three days ago on Oct. 3, Trump tweeted, “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!” 

Trump has now blamed House Speaker Nancy Pelosi and Democrats for requesting much more than the $1.6 trillion offered by Republicans, he claimed in his tweets. Pelosi is seeking more support for state and local governments. 

Powell today said in his virtual panel that too much support from the government “will not go to waste,” adding concern that too little support would exacerbate issues within a recovery that’s already running out of steam as job numbers have slowed. Powell estimated that despite the 7.9 percent jobless claims in September, the real figure could potentially be around 11 percent when considering a lack of people looking for work or unsure about their job status as a result of COVID-19-related furloughs.