U.S. markets and stock exchange traded funds rose Wednesday on the broader circulation of the coronavirus vaccine and hopes that fiscal stimulus will support the economic recovery.
On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.4% and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.2%.
There has been an ongoing shift towards undervalued stocks that are expected to benefit from an economic recovery next year, with sectors like banking, energy, and materials outperforming, Reuters reports.
The markets were still eyeing Capitol Hill for a bigger stimulus check, but Senate Majority Leader Mitch McConnell blocked a quick vote to back President Donald Trump’s call to increase COVID-19 relief.
“We’re having a little bit of hangover after Monday’s approval of the stimulus package,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters. “It’s muted somewhat because the $2,000 additional package seems to be still out there but was killed for the moment by the Senate.”
Many believe the markets will maintain their momentum in the new year after copious amounts of stimulus to help support the recovery process.
“The fundamental tailwinds that have propelled the market to all-time highs are still going to be in place next week and over the course of 2021,” Hank Smith, head of investment strategy at Haverford Trust, told the Wall Street Journal. “Extraordinary monetary policy, extraordinary fiscal stimulus, an economy that is poised to surge.”
Adding to the positive global sentiment, Britain approved the emergency use of AstraZeneca and Oxford University’s coronavirus vaccine, which will be administered starting Monday.
The first known U.S. case of the highly infectious Covid-19 variant first discovered in the United Kingdom was also detected in Colorado.
“We are going to keep getting this push-pull, vaccine versus virus, politics versus economics, for a while yet,” Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe, told the WSJ. “November was a great month for markets and there was always going to be a pause for breath. December seems to be just that.”
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