U.S. Stock ETFs Mixed in Thin Holiday Trading | ETF Trends

U.S. markets and stock exchange traded funds continued to waver through Wednesday as rising COVID-19 infections weighed on any further forward momentum.

On Wednesday, the Invesco S&P 500 Equal Weight ETF (RSP), which follows the S&P 500 Equal Weight Index (EWI), rose 0.2%. Meanwhile, the S&P 500 was flat, the Dow Jones Industrial Average was 0.2% higher, and the Nasdaq Composite fell 0.3%.

“The market thinks that Omicron is going to hit just a few sectors of the whole economy, and most stocks will be good for that,” Luiz Pacheco, wealth advisor at Brainvest Wealth Management, told Reuters.

As more information comes in, investors are becoming more comfortable with the COVID-19 Omicron variant’s potentially less detrimental effect on the U.S. economy. State governors are not taking a heavy-handed approach in restrictions and are actively avoiding disruptions.

“There’s an element of positivity. The data continues to suggest that the disease itself caused by Omicron is materially less severe than the variants which have preceded it,” James Athey, an investment manager at abrdn, told the Wall Street Journal. “That’s always been the endgame for the pandemic.”

While the last five trading days of the year and the first two of the subsequent year are typically bullish for U.S. stocks, market observers have warned against being too focused on daily moves, since the holiday season tends to experience some of the lowest volume, which could aggravate price fluctuations. Trading volumes hit their lowest level all year on Tuesday, according to a composite metric that includes the New York Stock Exchange and the Nasdaq.

Nevertheless, stocks have largely pushed higher in recent days as traders look to the new year, with many anticipating a continued economic recovery and a strong corporate earnings season.

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