Real estate stocks rise as odds of a Fed rate hike fall

what happened

US real estate stocks climbed sharply as the CME FedWatch tool showed the chance of a 25-basis-point Fed rate hike at the October 27–28 meeting dropping to 15.5%, from 17.7% a week earlier and 55.4% a month earlier. The S&P 500 Real Estate index gained 1.15% over the week, and the State Street Real Estate Select Sector SPDR ETF rose 1.32%.

According to S&P Global Market Intelligence, economists are doubting whether rate changes still work as a tool against inflation in an economy driven by AI. Torsten Slok, chief economist at Apollo Global Management, argued that AI investors expect returns of 10%, 20% or even 30%, so rate moves matter little to them. He added that capital and labor are being pulled away from housing and autos, which would be hit harder by further hikes.

CoStar Group (+8.90%) and Host Hotels & Resorts (+5.83%) led the weekly gainers, while Equinix fell 3.91%.

why it matters

For markets, the key point is that rate expectations remain the main driver for REITs: a lower chance of a hike eases pressure on property funds that are sensitive to borrowing costs. At the same time, AI and tech stocks sold off during the week on worries about financing the infrastructure boom.

market impact

REITs and real estate: lower rate-hike odds ease pressure on the sector

instruments