Stock ETFs Start the End of 2020 with a Bang | ETF Trends

In the last trading week of 2020, stocks and index ETF started off with fireworks, as investors cheered  President Trump’s surprise signing of an economic relief bill.

The Dow Jones Industrial Average advanced over 200 points, or 0.7%, as the S&P 500 gained 0.88% and the Nasdaq Composite added 0.9%.

Major stock ETFs are also breaking to higher ground on Monday. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all advancing just before 1PM EST.

Just days after suggesting that he would veto the bill, the president signed a $900 billion Covid-19 relief package into law, avoiding a government shutdown, and augmenting unemployment benefits to millions of Americans. Although the bill is currently only providing $600 in direct payments to Americans, the House is anticipated to vote on a $2,000 direct payment on Monday, although the GOP-led Senate is likely to resist the efforts.

Investors seemed to see through the usual bluff, waiting patiently for the bill to pass and taking comfort in other economic measures that are already in place.

“All the bluster neither significantly changed to outlook for stocks, as markets still expected (and ultimately received) stimulus of a minimum of $900 billion to pass,” wrote Tom Essaye, founder of The Sevens Report.

“The five pillars of the rally (Federal stimulus, FOMC stimulus, vaccine rollout, divided government and no double dip-recession) re-main largely in place, and until that changes, the medium and longer-term outlook for stocks will be positive,” Essaye added.

Tech Stocks & Covid-19

Tech stocks are early favorites this week, with Apple driving the Dow higher in gaining 3.2%, while Amazon added 3.32%. Consumer discretionary, tech, and communication services each climbed over 1% to boost the S&P 500 as well. The gains helped lift the Technology Select Sector SPDR Fund (XLK) over 1% Monday.

While Covid-19 continues to ravage the country and globe, the major stock indices are looking to end the year in a much better position than when news of the coronavirus pandemic first spread. The S&P 500 has added 15.6% in 2020, while the Dow has gained 6.6%. Meanwhile, the Nasdaq rocketed 43.7% this year as investors piled into high-growth technology stocks during the pandemic.

“Equities seem poised to end the year on a high note, and I think for good reason,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “There’s additional government stimulus, which is providing some measure of economic stability; medical progress for Covid-19 continues to evolve; and the macro environment is favorable for stocks.”

Unfortunately, the coronavirus is still a very real threat. Over the past week, the U.S. has recorded at least 184,000 new infections per day, according to data from Johns Hopkins University, something that could only become more dire following the holiday celebrations, according to health experts like Dr. Anthony Fauci. Fortunately, the two vaccines produced by Pfizer and Moderna commenced distribution this month, and thus far more than a million people in the United States have been vaccinated.

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