Stock ETFs Struggle Near Lows After Worst Day Since March

Stocks indexes climbed higher overnight Thursday after one of the worst days on Wall Street since March, and are attempting to maintain some of those gains on Friday.

The Dow Jones Industrial Average traded about 1.5% higher after dropping more than 1800 points Thursday, or 7%. The S&P 500 added 1.15%, after trading higher overnight, while the Nasdaq Composite gained 0.99%. The Dow had rallied more than 800 points earlier in the day, while the S&P 500 had climbed more than 80 points, before relinquishing most of those gains on the open.

The  SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are attempting to stay green on Friday as well.

 All three major averages are set to notch their first weekly losses in a month, with the Dow and S&P 500 both down more than 5% week to date while the Nasdaq has given back 2.4% after making fresh all-time highs recently.

Investors on buying travel stock once again on Friday, after watching them get battered the day before as investors feared the reopening of the economy could be delayed by a second wave of cases. Airline stocks are climbing for example, with the US Global JETS ETF (JETS) adding 8.61% after falling hard Thursday.

Even after Friday’s bounce, Morgan Stanley Investment Management’s Andrew Slimmon said: “Given the magnitude of the rally, it would shock me if we had a one-day sell-off and that’s it.”

“The stocks that are up the most from the lows are still the risk-on, high beta, value, small-cap stocks,” Slimmon, who is a managing director and senior portfolio manager at the firm, told CNBC’s “Squawk Box Asia” Friday morning Singapore time. “They’re still the big winners and I would suspect that there’s more pain to come near-term before the market clears out kind of this excessive speculation that we’ve seen recently.”

While the S&P 500′s rally on Friday briefly drove the index back above its 200-day moving average, a widely followed level by traders, traders will have to see where the index closes for guidance. The broad market index closed below that level on Thursday for the first time since May, signally a potential trend reversal again.

“Once the S&P 500 crossed above the 200-day moving average [last month], it gave investors the green light to buy stocks; it said things are OK with the economy,” said Mitchell Goldberg, CEO of ClientFirst Strategy. “It also signaled hedge fund managers who got too heavy into cash are now way behind their benchmarks and are now performance-chasing.”

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