U.S. markets and stock exchange traded funds seesawed between gains and losses Thursday as signs of a weakening labor market weighed on the positive earnings results.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 0.7%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.1%.
Americans filing new applications for unemployment benefits dropped to 900,000 last week but remained elevated as the resurgence in COVID-19 cases rages on, fueling concerns that the economy could cut more jobs for a second straight month in January, Reuters reports.
“It’s still the realization that the disappointment in the employment is not going away anytime soon and that we’re not out of the woods from the economic point of view,” Ryan Detrick, chief market strategist at LPL Financial, told Reuters.
Meanwhile, investors have been shifting back into growth names after Netflix’s stellar results that fueled the “stay-at-home” plays, with the Russell 1000 growth index outperforming the Russell 1000 value index.
“Investors are going to realize that technology names are still where a lot of impressive earnings growth is coming from and those shares could hold up well because they’ve underperformed for the last couple of months,” Detrick added.
Tech heavy-weights Intel and International Business Machines are up to bat, reporting results after markets close.
“Earnings season looks relatively good and seems to confirm this picture that the U.S.—because there was no full lockdown—did well in the fourth quarter,” Carsten Brzeski, ING Group’s global head of macro research, told the Wall Street Journal. “Stock markets are really looking through the short-term outlook for the economy, which has worsened over recent days.”
Observers are also hopeful that a large stimulus bill is coming to support a flagging economy. Democrats took control of the U.S. Senate Wednesday, and Republicans exhibited willingness to work on President Joe Biden’s $1.9 trillion stimulus plan.
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