Stimulus Hopes Lifts U.S. Stock ETFs | ETF Trends

U.S. markets and stock exchange traded funds strengthened Monday on hopes that the next government stimulus package will help support a flagging economy that continues to fight off rising coronavirus cases.

On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 1.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) rose 0.3%, and SPDR S&P 500 ETF (NYSEArca: SPY) gained 0.5%.

U.S. Senate Republicans are expected to unveil their $1 trillion coronavirus aid package ahead of the expiry of enhanced unemployment benefits at the end of the week, Reuters reports.

“The market is factoring in the fact that there’s going to be some kind of extension of around one-and-a-half to 2 trillion dollars of total aid, and if that does not occur it would be a near-term negative catalyst,” Mike Mussio, president at FBB Capital Partners, told Reuters.

Investors are also in for a big week for the technology sector as four FAANG members – Apple (NasdaqGS: AAPL), (NasdaqGS: AMZN), Facebook (NasdaqGS: FB) and Alphabet Inc. (NasdaqGS: GOOGL) – are set to report second quarter results this week.

“It’s probably going to be the biggest week of the year in terms of what people are expecting due to the impact from the coronavirus outbreak,” Brian Pirri, principal at New England Investment and Retirement Group, told Reuters. “I don’t think we’re going to see a slowdown in technology stocks. There was some profit-taking due to high valuations, but I don’t see them going away anytime soon.”

These tech companies have weathered the Great Shutdown better than many other sectors of the economy as the Covid-19 pandemic closed down many segments of the market and forced many to stay at home. Some even anticipate these tech stocks to outperform after pulling back.

“The setup is better than it would have been if all these tech stocks were sitting at record highs going into earnings,” Jason Ware, Partner and Chief Investment Officer at Albion Financial Group, told the Wall Street Journal.

According to IBES Refinitiv data, 80% of the 130 S&P 500 firms that have reported so far have beaten expectations, but the bar for earnings estimates this time around has been set pretty low.

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