Stock ETFs Tread Water Near Highs on Stimulus Optimism | ETF Trends

Stocks and index ETFs have been tepid, locked in sideways action once again on Friday, as prices hover near record levels after a recent run-up last week.

The Dow Jones Industrial Average traded slightly lower on the day, while the S&P 500 and the Nasdaq Composite were both marginally higher after tagging record highs this week.

Major stock ETFs are mixed on Friday as well. The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ) are slightly higher, while the SPDR Dow Jones Industrial Average ETF (DIA) is lower just after 2:30 PM EST.

Analysts are noticing a slowing down in the pace of equities and index ETFs as well.

“Is the path to much higher equities becoming smaller…to put it differently, are the bulls attempting to thread a needle? Seems that way near term,” Dennis De Busschere, macro research analyst at Evercore ISI, said in a note.

Even with the respite in stocks, the key benchmarks are still headed for a positive week that’s hanging near record levels and trading within 0.2% of record levels.

The Latest on Biden’s Stimulus Proposition

Investors are still awaiting stimulus news, as it appears that while President Biden isn’t likely to achieve all of his asks, Congress is predicted to be close to the president’s $1.9 trillion proposal, according to a Deutsche Bank survey.

Biden said Thursday that his administration has secured deals for an additional 200 million doses of coronavirus vaccine from Moderna and Pfizer, bringing the U.S. total to 600 million. Biden added the U.S. will have sufficient supply for 300 million Americans by the end of July.

“More than the economic data or earnings reports, the equity market is being driven by current and expected liquidity pumped into the economy,” said David Donabedian, chief investment officer of CIBC Private Wealth, in emailed comments.

Earnings are also likely to continue beat expectations.

“Between the ongoing medical and economic improvements, markets continue to expect a much better 2021 and that has supported prices,” Brad McMillan, chief investment officer at Commonwealth Financial Network, said in a note. “Fourth-quarter earnings are coming in well ahead of expectations, and analysts are now adjusting their 2021 earnings estimates upwards.”

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