U.S. markets and stock exchange traded funds weakened Friday, on pace to end their worst week since late October as investors lost confidence in a much needed financial aid package to shore up a flagging economy, offsetting optimism over an imminent Covid-19 vaccine.
On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) dropped 0.6%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was flat, and iShares Core S&P 500 ETF (NYSEArca: IVV) fell 0.4%.
Investors have been counting on the next installment of the coronavirus relief package as daily Covid-19 related deaths rise, new states impose business restrictions, and increased layoffs weigh on the nascent economic recovery.
Hopes of a quick turnaround were dashed after House Speaker Nancy Pelosi on Thursday raised the possibility of stimulus negotiations dragging on through Christmas, Reuters reports.
“Investors are wondering what is it that Congress needs to hear before they decide to act … their focus is more on politics than it is on the American economy,” CFRA Chief Investment Strategist Sam Stovall told Reuters. “The economy is not getting stronger and it needs at least a short-term shot in the arm.”
Market observers, though, still believe that fiscal and monetary stimulus measures will help markets push through this short-term hurdle and keep stocks going through the new year ahead.
“The synchronized effort (fiscal and monetary policy) and the vaccine should be a powerful combination to have a year of meaningful economic expansion,” Marco Pirondini, U.S. head of equities at Amundi Pioneer Asset Management, told Reuters.
Meanwhile, the U.S. Food and Drug Administration is expected to approve an emergency use authorization for Pfizer Inc’s COVID-19 vaccine later Friday, according to the New York Times.
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