Stocks and index ETFs are struggling again on Thursday in mixed trade, amid lackluster U.S. unemployment data and spiking Covid-19 infections, but financial experts are still optimistic due to recent vaccine developments.
The Dow Jones Industrial Average and S&P 500 continued to drop for the third consecutive day, with the Dow giving up almost 200 points. The S&P 500 slipped another 0.2%.
Big Tech is modestly green in early afternoon trading, helping the Invesco QQQ Trust (QQQ) remain positive, while the SPDR Dow Jones Industrial Average ETF (DIA) and SPDR S&P 500 ETF Trust (SPY) declined slightly, after a robust performance Monday and declines throughout the remainder of the week.
Investors reacted to disappointing economic data, as the Labor Department revealed that 742,000 Americans filed for unemployment benefits in the week of Nov. 14, beating a Dow Jones estimate of 710,000.
Meanwhile, the number of U.S. coronavirus cases continues to climb, with Johns Hopkins University data publishing that the seven-day mean of daily new U.S. coronavirus infections has hit 161,165, climbing 26% from last week. Cumulatively, 11.5 million coronavirus cases have been verified, and several areas of the United States are now under more stringent guidelines, including California and New York.
“Negative COVID headlines/increased economic lockdowns (especially in NYC and LA County) are starting to offset vaccine optimism, and that’s weighing on stocks,” wrote Tom Essaye, founder of The Sevens Report. “We are now facing the biggest number of economic restrictions since the Spring, and that will weigh on economic growth and, potentially, earnings.”
Positive vaccine news is helping to prevent significant stock and ETF losses, however, as preliminary data Thursday divulged that University of Oxford and AstraZeneca’s vaccine candidate resulted in a similar immune response among all adults.
Stocks and index ETFs fell on Wednesday’s struggle, but are still having a robust November performance, bolstered mainly by coronavirus vaccine optimism, with the S&P 500 advancing 9.1% month to date, and the iShares Core S&P 500 ETF (IVV) climbing as a result. Analysts continue to see this vaccine news as bullish for stocks and ETFs.
“You see the market really kind of wanting to move in one direction, and then I think the vaccine news was certainly a catalyst to accelerate that a little bit. So I wouldn’t be surprised to see that trade persist for some time,” Jeff Mills, chief investment officer at Bryn Mawr Trust, said about the rotation into cyclical names.
“That being said, I do think the leadership in the market could be volatile over the next couple of months because you’re going to be battling Covid case increases and incrementally better news relative to the vaccine,” Mills continued.
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