U.S. Stock ETFs Strengthen as Investors Hope the Worst is Over

U.S. markets and stock ETFs are picking up steam on hopes that the coronavirus outbreak is stabilizing with those infected in the United States close to peaking.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.3%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 2.2%, and SPDR S&P 500 ETF (NYSEArca: SPY) gained 2.2%.

Improving numbers on hospitalizations and intensive care admissions suggest the number of new coronavirus or COVID-19 cases in New York could be leveling off, the Wall Street Journal reports.

“The market clearly is reacting Monday, to a certain extent yesterday and even today to incremental news that at the margin is a little better in terms of the peaking of the virus, perhaps in Italy, perhaps in Spain, perhaps in New York City,” Hank Smith, co-chief investment officer at Haverford Trust, told the WSJ.

The U.S. death toll from the coronavirus has spiked this week, with nearly 50% more deaths Tuesday than in any previous day in the pandemic.

“The stock markets are forward-looking, so there’s anticipation that, hopefully, sooner rather than later, the death count will be less than anticipated,” Marc Pfeffer, chief investment officer at CLS Investments, told the WSJ. “I’d like to think that the bottom has been put in, but we can’t say for sure. The conversations are now starting to move towards the reopening of the economy.”

Investors may now focus on how long this economic weakness will last as the robust stimulus measures kick in.

“Bear markets tend to last longer than we think,” Gregory Perdon, co-chief investment officer at Arbuthnot Latham, told the WSJ. “Although we have shock and awe with relaunching QE, we don’t know that the on-the-ground economic support is going to be there quickly.”

The government is still pushing forward new policies to help support a battered economy. Top U.S. Democrats in Congress said they would support the Trump administration’s request for $250 billion in additional aid for small businesses if the package includes money for hospitals, local governments, and food assistance.

Additionally, the corporate earnings season starts next week where many anticipate poor results from a quarter bogged down by the coronavirus.

“Investors are bracing themselves for a terrible earnings season and are going to try to look for clues on what businesses will see more normalized operations,” Yung-Yu Ma, chief strategy officer at BMO Wealth Management, told Reuters.

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