U.S. markets and stock exchange traded funds were mixed Wednesday as investors weighed the prospects of a strong earnings season against the political uncertainty surrounding Donald Trump’s inauguration.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up less than 0.1% Wednesday.
Financial stocks helped prop up the markets in recent sessions after a string of favorable fourth quarter earnings results, such as Goldman Sachs (NYSE: GS) revealing stronger-than-expected profits.
However, investors have grown more cautious ahead of Trump’s Friday, January 20 inauguration
“Unless something markedly happens during the earnings season, I think we will kind of bounce around for a while,” Bret Chesney, senior portfolio manager at Alpine Global, told Reuters.
Traders have been unwinding some risk-driven trades that have supported the the equity market rally since the U.S. election on November 8, reports Jon Sindreu for the Wall Street Journal.
The markets have strengthened on hopes that Trump would slash taxes and regulations while bolstering infrastructure spending to stimulate further growth in the U.S. economy. Investors are now waiting on further details in these proposed policies, along with fourth quarter earnings results, to determine whether growth and inflation will maintain their pace.
”A lot of the indicators we follow are now pointing at the market being overstretched,” Andrew Pease, global head of strategy at Russell Investments, told the WSJ. “The U.S. economy’s fine, but markets have fully priced that in already.”
Furthermore, traders will be watching Federal Reserve chairwoman Janet Yellen’s speech Wednesday evening to gain hints on where interest rates are likely to be heading.
For more information on the markets, visit our S&P 500 category.