U.S. Stock ETFs Turn Positive as Vaccine Hopes Offset Economic Weakness

U.S. markets and stock exchange traded funds struggled toward positive gains at the end of the Wednesday’s session after wavering in response to weak economic data.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was flat, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.2% and the iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.2%.

Republicans and Democrats in Congress remained in a stalemate on a new aid package relief for the coronavirus pandemic-weakened U.S. economy, but some more optimistic investors argued that bad economic news could push policy makers harder on a deal, Reuters reports. U.S. House Majority Leader Steny Hoyer was hopeful that a deal could be reached “in the next few days.”

Adding to the argument for another round of fiscal stimulus, updated data revealed private payrolls rose less than expected in November, which may be attributed to rising new infections and subsequent business restrictions weighing on the labor market’s recovery.

Any sign of a worsening labor market in the Friday’s broader jobs report ahead could put further pressure on lawmakers to agree to a stimulus package, said Ross Mayfield, an investment strategy analyst at Baird.

“They are watching this stuff as much as investors are,” Mayfield told Reuters. “It could be one of those reports where bad news is good news if it spurs the right stakeholders to come to the table.”

The markets were also closely watching signs of progress in the race to distribute a vaccine. In the latest upbeat development, Pfizer Inc and BioNTech’s COVID-19 vaccine received the go-ahead in Britain, the first Western country to approve a shot for COVID-19.

“That’s exciting but that was also expected,” Chris Konstantinos, chief investment strategist at RiverFront Investment Group, told the Wall Street Journal. “We’re in a bit of an information vacuum. We’re through earning season and now the market is kind of waiting until the end of the year and watching vaccine news and stimulus news.”

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