U.S. equities and stock index ETFs exploded higher on Monday, catapulted by robust gains in the tech sector, and a surge in global equities, including Chinese stocks, as investors and traders attempted to continue the momentum from last week’s solid performance, despite an incessant growth in coronavirus cases.
The Dow Jones Industrial Average popped as much as 395 points, or 1.5%, while the S&P 500 added 1.6%, and the Nasdaq Composite, which has been leading the other indexes surged 2.5% to an all-time high.
Stock index ETFs are climbing along with the underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are trading positive early Monday afternoon.
On Friday, China’s services PMI saw the best gain in a decade. The China June Caixin services came in at 58.4, from 55 the month earlier. The June Hong Kong PMI was at 49.6 from 43.9 in May.
“There are other things going on in China too. If they want the equity markets up, they’ll be up. You also had it fueled by short-covering,” said Andrew Brenner of National Alliance. He said as he watched the action overnight, it appeared to be panic buying.
While some economists and financial experts are still bearish on the market longer term, there are now a significant number of pundits who see a V-bottom for stocks, increasing Fed stimulus, and potentially new highs for the S&P 500.
“I’m starting to believe the Covid case is an inverse indicator. The worse it gets, the more the market does better because it means more Fed and fiscal stimulus will come towards the markets,” said Brenner.
“The economy is doing a lot better than most of the economists think,” said Jeff Saut, chief investment strategist at Capital Wealth Planning, to CNBC’s “Squawk Box” on Monday. “We may stall here for a while into the fall, into September, October, November, but I think you’re going to get a rocket ship coming in the fall of this year…I think the S&P 500 is going to trade above 4,000.”
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