Stock ETFs Trade Mixed As Coronavirus Cases Continue To Advance

Stock indexes and ETFs are mixed on Tuesday, following a run higher in the overnight futures session and then a subsequent decline in both the Dow Jones Industrial Average and S&P 500. The number of increasing coronavirus cases continue to worry markets, as investors attempt to push stocks towards June highs.

While the other two benchmark indices are showing losses as of nearly 1 pm EST Tuesday, the Nasdaq Composite chartered fresh highs on Tuesday, recovering from a drop earlier in the session, as shares of major tech companies such as Microsoft and Apple showed gains.

Stock index ETFs are mixed, in-line with the underlying benchmarks. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), are lower while the Invesco QQQ Trust (QQQ) is trading positive early Tuesday afternoon.

Tech-stock continues to lead the way, with the Vanguard Information Technology ETF (VGT) adding more than 0.5%. The Nasdaq rallied 0.3% and was on pace to notch a record closing high. Microsoft shares notch an all-time high, gaining 1.6%. Apple also achieved record levels, gaining 1.2%.

“It’s the same group of stocks that lead us higher almost on a daily basis,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The rest of the market follows, but it’s certainly nowhere near as strong as that group.”

While coronavirus cases continue to grow, the U.S. government awarded drugmaker Novavax a $1.6 billion contract to develop a coronavirus vaccine, the largest amount to be granted under the White House’s “Operation Warp Speed.” The company’s shares exploded by 34%, driving the Virtus LifeSci Biotech Clinical Trials ETF (BBC), which is a holder of the stock, higher as well.

Despite the positive biotech developments, Atlanta Federal Reserve President Raphael Bostic told The Financial Times the U.S. economic recovery will be “bumpier” as coronavirus cases continue to climb.

The number of people hospitalized with Covid-19 increased by 5% or more Sunday in 23 states. Texas and California were particularly hard hit. Texas reported a record of over 8,000 hospitalizations on Sunday. California Gov. Gavin Newsom on Monday requested that six additional counties shutter their indoor businesses.

“While we expect continued volatility, we think there are grounds for optimism that economies and markets can weather the recent acceleration in infections,” Mark Haefele, chief investment officer at UBS, said in a note. “There are signs that healthcare systems are coping better with COVID-19, reducing the need for restrictions on freedom of movement. Economic data continues to point to resilience.”

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