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Pfizer Inc.

Markets Bet on a Return to Normal Life

Strategic Insights

— 1 min read

Monday's price swings in shares of travel and entertainment companies showed traders' optimism about a COVID-19 vaccine, but a deeper dive into real estate investment trusts (REITs) reveals a potential opportunity for investors. With many Americans likely to return to their offices and workplaces after the pandemic, REITs could see a significant rebound. Office REITs in particular, such as Vornado Realty Trust and SL Green Realty Corp., posted impressive gains on Monday, surging by a record or near-record amount.

Key Takeaways:

  • REITs, particularly office REITs, may see a significant rebound as Americans return to their workplaces after the pandemic.
  • Vornado Realty Trust and SL Green Realty Corp., two major office REITs in New York, surged by a record or near-record amount on Monday.
  • The Vanguard Group Inc.'s Real Estate ETF, the largest REIT ETF, jumped as much as 10.5% to its highest level since early March.
  • Shares of cruise lines and movie theaters, such as Carnival Corp. and AMC Entertainment Holdings Inc., rose on the news of a COVID-19 vaccine, but REITs offer a more conservative bet on a return to normal life.
  • Smartphone manufacturer ZOOM Video Communications Inc. and Peloton Interactive Inc., which benefited from the pandemic's lockdowns, fell sharply on Monday.
  • Analysts believe REITs tied to lodging, senior living, and malls may also see a comeback with progress on a vaccine, but this may be a longer road to recovery.

Statistics:

  • The JETS ETF, which counts Southwest Airlines Co., Delta Air Lines Inc., United Airlines Holdings Inc., and American Airlines Group Inc. as its four biggest holdings, soared as much as 25%, its biggest intraday move since its launch in 2015.
  • AMC Entertainment Holdings Inc.'s shares gained as much as 76% to $4.39 on Monday, while Carnival Corp. surged almost 44%.
  • REITs tend to be a popular diversifying investment because they trade like stocks but pay out large dividends like fixed-income assets.
  • The Real Estate ETF jumped as much as 10.5% to its highest level since early March.

Sources:

  • Bloomberg Opinion
  • JETS ETF
  • Vornado Realty Trust
  • SL Green Realty Corp.
  • The Vanguard Group Inc.
  • Zoom Video Communications Inc.
  • Peloton Interactive Inc.
  • Bloomberg News

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