U.S. markets and stock exchange traded funds slipped Friday as the spike in coronavirus cases threaten widespread shutdowns that would upend the economic recovery.
On Friday, Invesco QQQ Trust (NASDAQ: QQQ) rose 0.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.2%, and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 0.5%.
The markets have seen muted action in recent sessions after positive news on a possible Covid-19 vaccine has been offset by a surge in new coronavirus cases. Some see the recent market moves as a pause after the post-election rally.
“We’re looking at short-term negatives,” Paul Jackson, head of asset allocation research at Invesco, told the Wall Street Journal. “The markets are busy trying to balance that with the longer-term good news that is coming from vaccines.”
Jackson argued that the equity markets could experience some short-term oscillations before stabilizing in 2021 once a vaccine starts to circulate.
Further weighing on market sentiment, U.S. Treasury Secretary Steven Mnuchin said several federal support programs are scheduled to end on Dec. 31, adding that Congress should use the money to help small U.S. companies with grants instead, Reuters reports.
“From a psychological standpoint it (expiry of certain Fed loan programs) could make people a little nervous,” Mike Zigmont, head of trading and research at Harvest Volatility Management, told Reuters. “But the facility that is being terminated hasn’t been utilized, so the fact that it’s going away in December is not going to have a direct impact on anything.”
Some are still hoping for a federal stimulus package to help shore up finances in face of tougher restrictions in response to rising coronavirus cases after U.S. Senate Democratic leader Chuck Schumer and Republican Majority Leader Mitch McConnell decided to resume relief talks on Thursday.
“There is a very dangerous race occurring, which is how fast can vaccinations start versus how fast infections are spreading in the country,” Mike Zigmont, head of trading and research at Harvest Volatility Management, told Reuters.
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