Troubled by stalled stimulus talks, post-Fed meeting jitters, and potential vaccine delays, stocks and index ETFs are tumbling on Thursday, as the Nasdaq tests its recent lows, leading the other indices lower.
While the Dow Jones Industrial Average turned positive earlier in the session, the 30-stock index quickly tumbled, losing 1%. The S&P 500 followed suit, declining 1.5%, while the Nasdaq Composite tumbled to its lows, down over 2.11%, and back into correction territory on Thursday, despite a tepid FOMC announcement that briefly drove markets higher Wednesday.
The major stock index ETFs are sinking Thursday along with their underlying benchmarks, with the SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) all declining. The iShares Core S&P 500 ETF (IVV) fell over 1.45% Tuesday as well.
Thursday’s decline follows mixed messages about the timeline for a coronavirus vaccine, with President Trump stating late Wednesday that the U.S. could disseminate a vaccine as soon as next month, which conflicts with the director of the CDC, who told lawmakers earlier Wednesday that vaccinations would be available in limited quantities this year and there would likely be a six to nine-month wait for more substantial quantities.
Traders were also conflicted over the state of stimulus talks after President Trump mentioned Wednesday that he could approve a more significant package. However, Politico was reporting that Senate Republicans appeared hesitant to follow suit without more specifics on a bill.
“If we get a stimulus package and you’re out of the market, you will feel awful,” CNBC’s Jim Cramer said on Thursday.
“I do feel the stimulus package is very hard to get,” he said. “But if we do get it, you can’t be out of this market.”
Meanwhile, investors considered the results of the Federal Reserve’s interest rate comments, where the central bank indicated rates could stay tethered to the zero-bound through 2023 in an effort to generate inflation. Fed Chair Powell also urged lawmakers to continue with stimulus.
Powell said in a news conference that loose monetary policy will continue “until these outcomes, including maximum employment, are achieved.”
Unfortunately, the thought of lower rates for a prolonged time was not enough to drive markets higher but instead resulted in a selloff Thursday, suggesting that markets are still fragile, according to financial pundits.
“The major indices dipped back to their short-term trading range following the Fed’s announcements, confirming that bulls are still not out of the woods,” said Ken Berman, founder of Gorilla Trades. “While there was nothing scary in today’s Fed announcements, stocks reacted in a bearish fashion, especially in the tech sector.”
For more market trends, visit ETF Trends.