U.S. Stock ETFs Maintain Momentum on Earnings, Economic Strength

U.S. markets and stock exchange traded funds gained Friday as the first earnings season hit full swing and investors looked to signs of economic growth.

On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) was flat, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.4%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.3% higher.

LPL Financial strategist Ryan Detrick argued that U.S. markets could maintain their momentum as benchmarks push higher, the Wall Street Journal reports. Since 1950, when the S&P 500 rose between 5% and 10% in the first quarter, markets averaged a gain of about 12%.

“Think about it, we don’t want things to get too hot,” Detrick told the WSJ. The current trajectory “tends to suggest the market will continue to have an upward bias.”

The S&P 500 and the Dow Jones Industrial Average were on pace for their fourth consecutive weekly gain while the technology-heavy Nasdaq was just shy of its own all-time closing high as upbeat economic data and a solid start to the first-quarter corporate earnings season helped maintain the risk-on sentiment.

“You are just seeing blow out earnings from the banks and all the data pointing to a very strong reopening,” Thomas Hayes, chairman of Great Hill Capital, told Reuters. “So it’s a day for (the so-called) ‘reopening trade’ with strong financials.”

Remi Olu-Pitan, multiasset fund manager at U.K. investment firm Schroders, also pointed out that the Chinese economy expanded at a record rate of 18.3% in the first quarter, which could further add to optimism over the U.S.’s economic outlook.

“Maybe we should notch up our expectations a bit in the U.S. and even in Europe,” Olu-Pitan told the WSJ.

Nevertheless, lingering risks remain and could keep markets choppy.

“The biggest risk that could cause a (stocks) sell off is the development of COVID-19 variants, a slowdown in the reopening and persistent inflation,” Hayes added.

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