U.S. equities and stock exchange traded funds slightly rebounded Thursday as investors looked back into riskier assets in the wake of the political sell-off, betting on continued growth to support market gains through any short-term risk-off events.
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 0.1% Thursday.
“I’m interested to se if we can continue to keep the momentum throughout the day. It has paid to be a buyer in every sharp down move we’ve had over the last five years,” JJ Kinahan, chief market strategist at TD Ameritrade, told Reuters. “The first part of this could be people covering shorts from yesterday.”
Equities were higher after one of their worst days in months in response to turmoil in Washington that backed the Trump administration into a corner and revived concerns that the White House may struggle with its pro-growth agenda, such as tax cuts, deregulation and fiscal spending, which helped fuel the post-election rally.
Nevertheless, market observers argue that the short-term risk is unlikely to derail the ongoing rally, especially given the expanding global economy and strong corporate earnings.
“I still continue to go back to the economy when I’m talking to clients. As long as the U.S. economy remains in a good foundation…that creates a supportive environment for equities,” Shannon Saccocia, head of asset allocation and portfolio strategy at Boston Private Wealth, told the Wall Street Journal.
For instance, the Labor Department revealed Thursday the number of Americans applying for first-time unemployment benefits dipped last week for the third consecutive time, a sign of steady job creation.
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