U.S. markets and stock exchange traded funds drifted toward another record high Friday as investors waited on continued stimulus updates.
On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was down 0.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.1%.
“Most of these selloffs have proven just to be some profit taking only to see the market come back from any near-term selloff,” Rick Meckler, partner at Cherry Lane Investments, told Reuters. “Low interest rate, stimulus and improvement on the virus front providing greater confidence for investors to stay in the market and buy more.”
A decline in new COVID-19 cases and coronavirus-related hospitalizations in recent weeks have helped push the risk-on attitude and lift markets. Some market observers, though, have warned of near-term risks due to a new coronavirus variants and hurdles in the vaccine rollout.
A Reuters survey revealed the U.S. economy is projected to return to pre-COVID-19 levels within a year after the proposed $1.9 trillion fiscal package bolsters economic activity. However, it could take over a year for unemployment to return to early 2020 levels.
“We are at some reasonably stretched valuations at this point in time,” Jason Pride, chief investment officer for private wealth at Glenmede, told the Wall Street Journal. “I think if we didn’t have those sort of valuations, the market probably would be up more on these sort of news items.”
Meanwhile, about three-quarters of S&P 500 companies have already reported quarterly earnings results. Over 80% have surpassed estimates, according to FactSet.
“There is more confidence about earnings growth as we go through earnings season, more guidance from companies which look very promising,” Shaniel Ramjee, multiasset fund manager at Pictet Asset Management, told the WSJ. “Even some of the most affected areas like travel and leisure have had a slightly more positive tone.”
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