What happened

AGNC Investment (AGNC -1.28%) bounced around quite a bit on Thursday, surging early in the trading day, up as much as 5.6%, before falling later to end the day down 0.4%. AGNC is down 47% year to date (YTD) to $7.89 per share.

The major stock market indexes were mixed on Thursday as the Dow Jones Industrial Average was up 199 points (0.6%) while the S&P 500 was down 23 points (-0.6%) and the Nasdaq was off 178 points (-1.6%).

So what

AGNC Investment surged early on some good macroeconomic news and industry news. The big news was that the economy grew 2.6% in the third quarter, as measured by gross domestic product (GDP), topping estimates of 2.3% growth. The market surged, as fears of a recession were quelled, following GDP declines in the first two quarters of 2022. The GDP grew on increased consumer spending, a narrowing trade deficit, and a rise in government spending.

AGNC also got a boost from a solid earnings report from a fellow mortgage real estate investment trust (REIT), Annaly Capital, which beat earnings estimates. 

It provided AGNC with some momentum after it also topped earnings estimates in the third quarter, as was reported Tuesday. AGNC topped estimates with a $0.84 net spread and dollar roll income per common share – a non-GAAP metric that the company uses to measure income. The consensus estimate was $0.60 per share.

But the market turned south in the afternoon, particularly the Nasdaq, mainly due to a mixed earnings report from Meta Platforms, which beat revenue estimates but fell short of earnings projections. 

Now what

AGNC also may have gotten a boost from an analyst upgrade Thursday, Mark DeVries at Barclays upgraded AGNC Investment to overweight but lowered the price target to $9, from $12, following the Q3 results. DeVries cited the potential for attractive investment opportunities due to wider mortgage-backed security spreads, which are at their highest levels since the financial crisis of 2008-2009, reported The Fly.

It presents a bright spot in what has been a rocky housing market, as rising interest rates have slowed down mortgage applications and refinancings. It will likely remain so in the near term, as the Fed is expected to raise rates again in November.

But AGNC remains a solid option for dividend investors, with a $0.12 per month dividend and an 18.90% yield.