U.S. Stock ETFs Extend Gains on Strong Earnings, Dip in Jobless Claims

U.S. markets and stock exchange traded funds gained Thursday as upbeat fourth quarter results and positive economic data helped maintain the the risk-on momentum.

On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 1.0%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.9%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.9%.

The latest data on jobless claims revealed 779,000 people applied for initial benefits last week, a dip from the previous week, although the numbers remained at a historically high levels, the Wall Street Journal reports.

Economists have warned that a number of factors, including cold weather, a surge in Covid-19 case numbers, and the threat of a more highly contagious variant of the coronavirus, have contributed to the winter slowdown that weighed on the labor market’s recovery.

“The move now is for cautious optimism: the market is turning back to fundamentals,” Grace Peters, an investment strategist at J.P. Morgan Private Bank, told the WSJ. “Volatility is here to stay, but markets will ultimately grind higher.”

Investors were also watching updates on the new fiscal stimulus package that was making its rounds on Capitol Hill. In a recent call with House Democrats, President Joe Biden expressed willingness to send out a round of checks to a smaller, more targeted group of Americans.

“I think that flexibility is a good thing,” Peters said, adding that it could improve the chances of passing the next stimulus bill in a timely manner. “The market is expecting around $1 trillion, anything more than that could be positive for equities. This is one of the tailwinds we’re looking for to support growth through the second quarter and beyond.”

Stronger-than-expected results so far in the fourth quarter have also helped lift expectations, with the S&P 500 on pace to post earnings growth for the quarter instead of a decline as initially expected, Reuters reports.

“There’s news around the vaccines, the economic data is a little bit better, earnings have been pretty good across the board and there’s still talk of a $1.9 trillion stimulus package. So all of those things are good for Wall Street, and that’s why we’re seeing the market continue to rally,” Paul Nolte, portfolio manager at Kingsview Investment Management, told Reuters.

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