Stocks ETFs Trade Mixed For Second Day After Lackluster Data

Stocks sold off overnight and have since bounced back some, still struggled for direction on Thursday, as investors are considering the mounting tally of coronavirus cases in the U.S. and globally as well as lackluster unemployment data.

The Dow Jones Industrial Average slipped 0.3%, but fell as much as 271 points earlier in the session, becoming positive for a short time before falling off again. The S&P 500 stumbled 0.1% lower and is trading just below breakeven on the day. Meanwhile, the Nasdaq Composite is struggling to stay positive after, climbing 0.2%, looking to score its fifth straight day of gains.

Stock index ETFs are mixed, in-line with their underlying benchmarks. The  SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are tracking stock indexes as well, mostly negative as of 115pm EST.

Despite falling in recent months, initial U.S. weekly jobless claims climbed more than anticipated last week, reaching just over 1.5 million. Meanwhile, economists polled by Dow Jones projected a more modest 1.3 million.

“While initial claims have now fallen for the 11th straight week after the late March spike, this past week saw the slowest pace of decline on a percentage basis since early April so we’ll see if this is where it settles out for now,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a note.

Investors are also concerned about a resurgence in coronavirus infections, with states like Arizona reporting a record-high tally of fresh confirmed cases, and Texas witnessing an 11% daily spike in hospitalizations for patients with Covid-19 yesterday, while California has seen daily increases as well.

While China has also shown concerns over the coronavirus reinfection rate increasing, canceling a number of flights this week, a disease pundit in China stated that the latest outbreak of coronavirus cases in Beijing had been contained.

“We believe the market is pricing in quite a bit of good news and the rally is likely to take a breather in the coming months as the recovery evolves,” Scott Wren, Wells Fargo’s senior global market strategist, said in a note. “We expect volatility in the coming months as we gauge how the reopenings are going and how consumer spending is progressing.”

While stocks have been mixed and choppy over the last couple of days, the key benchmarks are on target to notch solid gains this week after a steep slump last week but may struggle with options on a number of contracts expiring this week. The Dow and the S&P 500 have added over 2% each this week so far, while the Nasdaq has ascended roughly 3.3%. Analysts warn that while there may be additional stock market reverberations from the coronavirus waves, there is less likely to be anything as serious as what happened in March.

“The fears regarding infection rates following the reopening of various States within the US and in other countries are understandable,” said Michael Shaoul, chairman and CEO of Marketfield Asset Management, in a note. “We do not doubt that progress will have a staccato feel to it in many localities, but we would be very surprised if another outbreak took hold that came anywhere close to what we saw take place at the start of 2020.”

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