U.S. markets and stock exchange traded funds were clawing back gains mid-Monday from early morning losses as more grow concerned over a second wave of coronavirus infections with easing shutdown measures.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was flat, and SPDR S&P 500 ETF (NYSEArca: SPY) rose 0.5%.
More states have begun to ease restrictions and reopen their economies as well as some European and Asian countries, but many are closely watching the tentative restarting economies, showing concern over potential new hot spots in the coronavirus pandemic.
For example, South Korea has been put under the microscope after its biggest one-day increase in new infections in a month, following steps to reopen its economy, and the government now warns that the country will likely face a second wave of infections, the Wall Street Journal reports.
“The next few weeks are going to be very bumpy and very important in parsing out what the recovery is going to look like,” Christopher Smart, chief global strategist at Barings, told the WSJ. “We’re going to have to live with the uncertainty of that two-steps-forward, one-step-back news flow.”
Further weighing on the outlook, factory furloughs across the U.S. are becoming permanent as more industries scale back. The reductions in factory positions are likely to accelerate the cutback in the industrial workforce that has been shrinking as a share of the overall U.S. economy for decades.
Richard McGuire, head of rates strategy at Rabobank, warned that governments could reverse the decision to reopen businesses if COVID-19 outbreaks return and the public may show reluctance in going about their normal routine.
“Allowing them to get back to business, as usual, doesn’t mean they are likely to,” McGuire said.
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