Stock ETFs Close The Quarter With A Boom | ETF Trends

After a tepid start to the session, stocks closed the day near their highs Tuesday, as equity indexes and stock ETFs finished one of their most solid quarterly runs in decades.

Most sectors finished the day positive, with the exception of aerospace, with funds like the Direxion Daily Aerospace & Defense Bull 3X Shares ETF (DFEN) closing nearly 6% lower on Tuesday.

The Dow Jones Industrial Average climbed 217.08 points, or 0.9%, to close at 25,812.88, while the S&P 500 added 1.5% to finish the day at 3,100.29 and the Nasdaq Composite gained 1.9%. to close at 10,058.77. All three major averages pegged their session high with less than an hour left in the session before selling off considerably into the close.

Quarterly performances were impressive however with gains not seen in decades. The Dow Jones Industrial Average finished the second quarter with a 17.8% gain, the largest quarterly gain since the Q1 of 1987 when it surged 21.6%. The S&P 500 had its biggest single quarter rally since Q4 of 1998 as well, jumping almost 20%. Meanwhile, the Nasdaq Composite exploded 30.6% for the quarter, the most impressive quarterly performance for the index since the tech explosion in 1999.
Stock index ETFs rallied alongside their underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) all closed positive on Tuesday.

“A combination of 1) Stimulus, 2) Positive trends in the virus, 3) Economic reopenings and 4) Hopes for a vaccine drove stocks higher in Q2,” wrote Tom Essaye, founder of The Sevens Report. “As we begin Q3, only one of those tailwinds is currently in place: Stimulus. That doesn’t mean we’ll see a correction, but be suspect of market rallies until we can add more forces supporting stocks because we’re one stimulus disappointment away from an ugly day.”

Despite the massive run, however, analysts are skeptical that such strength can persist in the face of continuing coronavirus infections and economic instability.

“It’s difficult to see the market continue the way it has been throughout the summer,” said Quincy Krosby, chief market strategist at Prudential Financial. She noted the market could become increasingly volatile if the number of coronavirus cases keeps rising and if some of the proposed virus treatments and vaccine fail. “That’s not only going to impact the biotechnology companies but the broader market as well.”

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