U.S. markets and stock exchange traded funds inched higher Thursday with technology shares taking the lead as the Federal Reserve’s cautious view of the economic recovery dampened sentiment.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.9%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was 0.1% higher and SPDR S&P 500 ETF (NYSEArca: SPY) rose 0.1%.
“Investors are now modifying where they would traditionally invest when they have uncertainty about the future,” Mike Loewengart, managing director of investment strategy at E*TRADE Financial Corp, told Reuters. “They see (tech) stocks continue to perform and they are now filling up a defensive void that has been left by a lot of traditional places that defensive investors move to.”
The markets pared early morning losses after updated data showed jobless claims unexpectedly crossed back above the 1 million marks last week. Jobless claims previously dipped below that level for the first time since the start of the pandemic in the week prior.
Separately, data from the Philadelphia Fed revealed the business conditions index fell more than expected in August.
“Weekly jobless claims show how uneven the economic recovery is going to be,” Art Hogan, chief market strategist at National Securities, told Reuters.
The uncertainty over ongoing weakness in the jobs market, along with the lapse in the enhanced $600 weekly unemployment benefit at the end of July, have weighed on the consumer-reliant economic recovery.
Nevertheless, the benchmark S&P 500 Index recently completed its fastest recovery from a bear market his week, breaking above its pre-coronavirus pandemic highs as it joins the Nasdaq Composite in hitting new records. However, both indices slipped Wednesday after minutes from the latest Federal Reserve policy meeting warned that the swift rebound in the labor market over May and June has begun to slow.
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