U.S. markets and stock exchange traded funds jumped Monday, recouping some gains after suffering through their worst week since October.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 2.7%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.9%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 1.7%.
“It’s just a relief rally after the sharp decline on Friday,” Peter Cardillo, chief market economist at Spartan Capital Securities, told Reuters.
The markets have experienced wide swings in the first month of 2021, with retail day traders fueling volatility in some highly shorted segments.
“Things have settled down a little bit,” Greg Harmon, founder and president of Dragonfly Capital, told the WSJ, adding that investors may try to reset for the new month. “Maybe we’re back to normal.”
The widely viewed Cboe Volatility Index, or VIX, a gauge of fear in the U.S. stock market, plunged Monday, but it remained elevated after surging 45% in January. Market watchers anticipate volatility to ease back down as hedge funds have already cut short positions on some of the more highly watched segments.
“There has always been, in financial markets, a desire on the part of investors to get rich quick and so you may still wind up with isolated incidents in which you wind up with volatile performance of certain assets,” Mark Dowding, chief investment officer at BlueBay Asset Management, told the WSJ.
Looking ahead, big tech stocks could continue to attract attention. Quarterly earnings from Amazon and Google-owner Alphabet Inc will come out on Tuesday to wrap up results from the so-called FAANG group.
Biden Stimulus Latest
Additionally, President Joe Biden will meet 10 moderate Republican senators on Monday to review the proposed $1.9 trillion U.S. COVID-19 relief package.
“Democrats could force through the larger package through resolution and based on the noise out of the administration, that may be the path that they’re going to take,” Phillip Toews, chief executive officer and portfolio manager for Toews Corp, told Reuters.
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