Stocks And ETFs Struggle To Hold Recent Gains At End Of Quarter

Stocks are pulling back from their recent move higher on Tuesday, after the Dow climbed nearly 700 points on Monday helped by an 8% rally in Pharma company Johnson & Johnson after it announced a vaccine candidate for the coronavirus, with the S&P 500 also moving up 3.4%.

Markets are struggling to hold onto Monday’s gains during the last day of the first quarter, in what has been a volatile and difficult period for investors, as they struggle to navigate historic market volatility sparked by the coronavirus pandemic.

The Dow Jones Industrial Average traded 44 points lower, or 0.58%. The S&P 500 was off by 0.67%, while the Nasdaq Composite is essentially flat on the day, up by 152 points earlier in the day.

Stock index ETFs are also struggling Tuesday, with the SPDR S&P 500 ETF Trust (SPY) down 0.63%, the SPDR Dow Jones Industrial Average ETF (DIA) off 0.53%, and the Invesco QQQ Trust (QQQ) also flat.

Goldman Sachs said that the economy would undergo a historic plunge in the second quarter, but that the recovery would then be the fastest in history, while the number of coronavirus cases in New York has jumped by 14% overnight to more than 75,000, both of which could be agitating markets.

There is some good news however as Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CNN that he is starting to see “glimmers” that social distancing could be mitigating the spread of the coronavirus in the U.S.

Meanwhile, traders and investors are looking to rebalance portfolios at the close of the first quarter and end of the month, which could also be causing gyrations in trade.

“As we conclude an unforgettable March and 1st Quarter today, the market seemingly has drifted (spiked) to no man’s land,” wrote Frank Cappelleri, executive director at Instinet. He noted that stocks have rallied from their lows last week but are still well below their record highs. But, “for what it’s worth, April has a better track record on average (+1.7% the last two decades, with a 75% win rate). It, too, has tended to do better in the final two weeks.”

Last week the Dow Jones Industrial Average notched its heftiest weekly gain since 1938, surging more than 12%. The S&P 500 and Nasdaq are finishing off their best week since 2009, after climbing 10.3% and 9.1%, respectively. Volatility has compressed considerably, but is still well above normal levels, creating wide swings for investors and traders as they attempt to navigate these tricky markets.

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