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Home Price Index Sent Real Estate Sector ahead of SPY

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Sector performances

In this article, we’ll look at the performances of the component sectors of the SPDR S&P 500 ETF (SPY) as of December 29 prior to the economic data release on the day.

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Economic data: real estate

As seen from the graph above, all the component sectors of the SPY marched into green territory as the market turned bullish on economic data and the oil price rebound. According to the S&P/Case-Shiller home price index report for October 2015, prices of existing home rose 0.9%, surpassing the consensus estimate of 0.6%. Generally, gains in home prices are supported by good economic conditions. Therefore, the Real Estate Select Sector SPDR (XLRE) led SPY with a gain of 1.7% on December 29. Stocks of Iron Mountain (IRM), Host Hotels & Resorts (HST), Boston Properties (BXP), and AvalonBay Communities (AVB) went up 3.1%, 2.3%, 1.6%, and 1.6%, respectively, on December 29.

Economic data: consumer confidence level

Apart from the home price index, the consumer confidence level for December 2015 rebounded and surpassed the higher end of the consensus estimate range. According to the report released by the Conference Board, the reading came in at 96.5 as against the estimated 93.5 reading. And the November reading was revised to 92.6.

The rise in the consumer confidence index reflects consumers’ optimistic attitude towards the US economy. It has boosted the stocks of the consumer sectors, especially the retail sector, as consumer confidence is associated with consumer spending. And especially in the holiday shopping season, stocks of retailers and online shopping companies tend to pick up. Therefore, we see a rise in the consumer discretionary sector and the consumer staples sector. Thus, GAP (GPS), PVH (PVH), Urban Outfitters (URBN), and TJX Companies (TJX) gained 2.1%, 1.9%, 1.6%, and 1.5%, respectively, on December 29.

Next, let us look at the performances of other sectors of the SPY.

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