After slipping Tuesday, stock index ETFs are rallying on Wednesday, as markets attempt to finish the year near record highs in the final days of 2020.
The Dow Jones Industrial Average added 184 points, or 0.6%, while the S&P 500 and the Nasdaq Composite gained roughly 0.4% apiece.
Major stock ETFs are also breaking to higher ground on Wednesday as well amid the end-of-year momentum. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all advancing just after 12:30 PM EST.
Stock indices were invigorated Wednesday after a British regulator approved a coronavirus vaccine developed by the University of Oxford and AstraZeneca for emergency use. The approval came after unearthing a new coronavirus strain in the United Kingdom, which has also now been seen in the U.S.
Investors continue to monitor the approval of additional fiscal stimulus as lawmakers debate the merits of offering larger direct payments to Americans, potentially increasing checks to $2,000 from $600. While Chuck Schumer is supporting the efforts, Mitch McConnell tied the payments hike to demands from President Trump on tech and the election.
$600 Checks Are On Their Way
Meanwhile, the existing $600 stimulus payments that have already been approved commenced dissemination Tuesday evening, according to Treasury Secretary Steven Mnuchin.
“While we’re happy with the stimulus that we have thus far, it’s likely that we’re going to need additional stimulus because the rising Covid cases will likely lead to more regional lockdowns after the holidays,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “If that’s the case, and the economic data starts to disappoint, we could see stay-at-home names outperform again in 2021.”
As stocks tick higher in the final days of the year, a plethora of Americans have been tasked with sheltering-in-place once again this holiday, as the U.S. is now recording at least 180,905 new cases and at least 2,210 virus-related deaths each day, based on a seven-day average using Johns Hopkins University data.
The infection rate hasn’t prevented the indices from tracking higher in 2020, despite a precipitous drop earlier this year. The Dow rallied nearly 7% for the year thus far, as the S&P 500 climbed 15.8%. Meanwhile, the Nasdaq Composite has surged to an impressive 43.7%, and analysts project the up move to continue into next year thanks to the new vaccines.
“We expect strong economic growth to reemerge in 2021 in the wake of headwinds from the pandemic in 2020 and the U.S.-China trade war in 2019,” said Doug Rao, portfolio manager at Janus Henderson Investors.
“While leadership has thus far been narrow – limited mostly to the digital economy – we foresee a broadening recovery as vaccines are widely implemented and consumers are able to reengage with the physical economy,” he added.
For more market trends, visit ETF Trends.