U.S. markets and stock ETFs strengthened for the third consecutive day Wednesday on promising economic data in the manufacturing sector and muted inflation..
On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was 0.5% higher and SPDR S&P 500 ETF (NYSEArca: SPY) rose 0.9%.
Rising optimism over U.S. economic growth and chances of a slower approach to interest rate hikes out of the Federal Reserve have helped maintain the equity market rebound.
“People are comfortable with the market,” Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital, told the Wall Street Journal. “The move this week has given a lot of people confidence.”
Producer prices rose in February at its smallest pace in over one-and-a-half years, in the latest sign of benign inflation. A positive sign for investors hoping the muted inflation levels will prevent the Fed from raising rates to head off an overheating economy.
“Producer price index is the second key metric for inflation this week which further solidifies the notion that the Fed will not be moving to tighten in any capacity for the foreseeable future,” Mike Loewengart, vice-president of investment strategy at E*Trade Financial, told Reuters.
The PPI data comes off the heels of the consumer price index numbers Tuesday that also indicated similar results.
Additionally, data Wednesday showed demand for long-lasting goods produced by U.S. factories increased in January for the third straight month, a strong sign for the manufacturing sector.
“Things have generally by and large not been as bad as feared,” Christopher Mack, a portfolio manager who helps manage the Harding Loevner Global Equity Fund, told the WSJ.
The more recent rally in technology and internet names, with the S&P 500 information technology sector up almost 4% this week, has also fueled optimism for high-flying growth stocks – prominent names like Amazon (NasdaqGS: AMZN) and Apple (NasdaqGS: AAPL) have now increased 13% or more for the year.
“When those stocks perform well, it makes people think the market is in a strong position,” Bajaj added.
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