U.S. Stock ETFs Rally on Partial Stimulus Hopes | ETF Trends

U.S. markets and stock exchange traded funds jumped Wednesday after President Donald Trump softened his stance on the next economic stimulus with partial effects to potentially pass through.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 1.9%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 2.0% and iShares Core S&P 500 ETF (NYSEArca: IVV) rose 1.9%.


The equity markets initially plunged after Trump cut off negotiations on a comprehensive coronavirus relief package on Tuesday, but he later urged Congress to pass a number of smaller, standalone bills to support American households, the battered airline industry and small businesses, Reuters reports.

“The only reason we were down yesterday was the tweet from President Trump, which he walked back last night. That’s why the market started off stronger and continued stronger. I think there’s full-blown expectations that some form of stimulus agreement is going to occur sooner than later,” Michael James, managing director of equity trading at Wedbush Securities, told Reuters.

In a series of overnight tweets, Trump stated he was “ready to sign right now” if presented a stand-alone bill for sending $1,200 checks out to Americans. He also urged Congress to approve a $25 billion package to support airlines’ payrolls after the industry began trimming costs with the expiration of the CARES Act support, and $135 billion for the Paycheck Protection Program to help small businesses.

Americans will also be watching out for a debate between Vice President Mike Pence and Democratic opponent Kamala Harris.

Oanda analyst Edward Moya argued that many are beginning to anticipate a Democratic victory in November, along with more stimulus spending with a Democratic majority, the Wall Street Journal reports.

“There’s not much that’s really going to change everyone’s medium and longer-term game plan for this market,” Moya told the WSJ.

“The market’s base case is that we’re going to get some stimulus postelection,” Michael Bell, a global market strategist at J.P. Morgan Asset Management, told the WSJ. “In many ways, a clear election result which leads to some stimulus—whether it’s Republican-led or Democrat-led—is better than an unclear result which leads to continued lack of stimulus.”

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