U.S. Stock ETFs Mixed as Tech Rebounds, Banks Fall Behind

U.S. markets and stock exchange traded funds wavered Friday, with the technology sector regaining its footing while bank stocks dragged on the S&P 500 and Dow Jones Industrial Average.

On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.5%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was up 0.2%.

“After a bit of significant selling, investors tend to lick their wounds and wake up and say: Is this a real selloff or a temporary blip in the road?” Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham, asked the Wall Street Journal. Friday’s relatively muted moves are “indicative that investors think it is just a bump in the road.”

Dragging on the major benchmarks, bank stocks slipped after the Federal Reserve said it would not extend a temporary capital buffer relief that helped ease the pandemic-driven stress in the funding market, Reuters reports. Consequently, banks will have to resume holding an extra buffer of loss-preventing capital against U.S. Treasuries and central bank deposits from next month forward.

“Banks have had such a significant up move this year and this news has only acted as a catalyst for profit taking,” Art Hogan, chief market strategist at National Securities, told Reuters. “It’s one of those days when we see a great deal of volume and volatility and we might see things change back on Monday.”

The U.S. benchmarks are on pace for a weekly dip after optimism over a $1.9 trillion fiscal package and the Fed’s promise to maintain its near-zero interest rate policy fueled a re-shifting of assets in the market toward economically sensitive sectors that benefit from a broad recovery. Meanwhile, technology stocks and the Nasdaq have retreated after valuations became pricey with the rise in yields.

“There is not much of a reason to justify this minor pullback as downside risks have come down significantly and the market is looking at how quickly the economy can reach pre-COVID levels,” Jeff Powell, managing partner at Polaris Wealth Advisory Group, told Reuters.

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