U.S. markets and stock exchange traded funds rallied Wednesday, with the S&P 500 once again on the cusp of its pre-coronavirus pandemic record highs, as investors refocus on the growing economy and stimulus support.
On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 2.5%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.8%, and SPDR S&P 500 ETF (NYSEArca: SPY) gained 1.3%.
The equity market has gained all but one day so far in August on the decline in coronavirus cases, bets on a potential vaccine, and support from the federal government and central banks.
“There’s optimism right now about an environment where the virus situation gets better but we still have a ton of stimulus in the system,” Ilya Feygin, a managing director at broker-dealer WallachBeth Capital, told the Wall Street Journal.
Investors are still closely watching over negotiations between Democrat and Republican lawmakers on a new coronavirus relief package. Senate Majority Leader Mitch McConnell warned that talks were “at a bit of a stalemate.”
“Markets, particularly in the last day or so, seem to be pricing in a stimulus even as lawmakers play down the odds,” Edward Park, deputy chief investment officer at Brooks Macdonald, an investment management firm, told the WSJ.
Many investors remain optimistic that a deal will eventually come through, especially in a politically charged year.
“While the negotiations are probably going to continue back and forth, in an election year environment, it’s very likely that this package gets across the finish line,” Matt Stucky, portfolio manager, equities, at Northwestern Mutual Wealth Management Co, told Reuters.
Market observers also believed that markets were relieved by Democratic presidential candidate Joe Biden’s announcement that Kamala Harris would be his running mate. Harris is considered to be a more moderate choice than others who were in consideration for the ticket.
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