U.S. markets and stock exchange traded funds wavered Tuesday as investors focused on the battered tech segment.
On Tuesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.9%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.5%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.1% lower.
“Tech has faced headwinds for the past couple of months,” Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions, told the Wall Street Journal. “But I find it hard to give up on tech. In the longer term, when you look at what’s really driving the U.S. economy, it’s tech.”
The Nasdaq rose to a two-week high as it continued to rebound on the back of tech-related stocks that suffered a blow from February’s selloff. Meanwhile, the Dow Jones Industrial Average dipped after enjoying six days of back-to-back intraday record highs on optimism that a $1.9 trillion fiscal stimulus package and vaccination distributions will support a broader economic recovery.
“Everything is feeding off the fact there is this huge recovery taking place,” Fahad Kamal, chief investment officer at Kleinwort Hambros, part of Société Générale, told the WSJ.
“That should obviously help some of the sectors that have been beaten down for a long time and are obviously a lot cheaper,” Kamal added. “We are going to see a rise of the forgotten.”
Investors are now waiting on the Federal Reserve to conclude its two-day meeting.
“Investors want to see more confidence from the central bank with respect to bringing down inflation, failure to which will weigh on equities,” Anthony Denier, chief executive officer of trading platform Webull, told Reuters.
The aggressive stimulus measures and improving economic outlook have stoked inflation fears, pushing up yields on bets that the Fed would hike interest rates sooner than later. According to BofA’s March fund manager survey, investors have slightly raised their cash allocations on fears of a ‘taper tantrum’ that could deal a blow to the record rally.
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