Rocket Companies (RKT +9.65%) investors had quite a Friday to remember, as the mortgage specialist's shares leaped nearly 10% higher in price across that trading session. This was a top-down bounce, inspired by a proposed initiative at the highest levels of the U.S. federal government.
The Trump pump
No less a political figure than President Trump was behind the rally in Rocket and other real estate-adjacent stocks. Late afternoon Thursday, the President said he was pushing to directly boost the mortgage market.
Image source: Getty Images.
In a post on his preferred social media platform, Truth Social, he wrote that he was directing his officials to purchase $200 billion worth of mortgage-backed securities. This, he explained, "will drive Mortgage Rates DOWN, monthly payments DOWN, and make the cost of owning a home more affordable."
"It is one of my many steps in restoring Affordability," he added, addressing a concern about economic conditions that more than a few U.S. citizens have expressed recently.
Such a purchase would almost certainly have a positive impact on the mortgage market if implemented to the promised degree. Rocket is a prominent player in that industry.
NYSE: RKT
Key Data Points
Uncertainty principle
The key word there is "if." Trump tends to make grand promises that aren't always fully realized -- his administration's recent climb-downs on numerous aggressive tariffs is a vivid example of this. Given that, I wouldn't necessarily pile into the stocks of mortgage companies; rather, I think it's best to buy or sell them on the natural prospects of the industry and those of the individual businesses.
