An Uncertain Outlook Weighs on U.S. Stock ETFs | ETF Trends

U.S. markets and stock exchange traded funds wobbled in an unsteady session on Friday as investors vacillated on the prospects of further stimulus measures against fears of another round of shutdowns in response to spiking coronavirus cases.

On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 0.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) dropped 0.2%, and SPDR S&P 500 ETF (NYSEArca: SPY) gained 0.2%.

The S&P 500 and the Dow Jones Industrial Average, though, were still on pace to close the week higher after optimism over an eventual coronavirus vaccine and hopes of a post-pandemic economic recovery helped offset concern over a surge in COVID-19 cases, Reuters reports.

“It’s going to be fairly range bound until we get more transparency into exactly how the coronavirus is going to affect us long-term,” David Trainer, chief executive officer of investment research firm New Constructs, told Reuters. “I don’t see a lot of downside, but I do see a lot of rotation away from the really expensive large-cap tech names, into more reasonably valued individual securities.”

The tech-heavy Nasdaq was set to end the week lower after investors trimmed exposure to some of the high-flying technology names like Microsoft Corp, Apple Inc, and Inc.

Meanwhile, value stocks have outpaced their growth counterpart for the past week.

“Part of the reason that growth has done so well is that there still is a bit of skepticism about getting the economy to a point where it’s firing on all cylinders,” David Lefkowitz, head of equities for the Americas at UBS Global Wealth Management, told the Wall Street Journal. “Part of the explanation for what we’re seeing today, or this week, is a little bit more optimism about getting the economy fully back on its feet.”

Investors are looking to the government for further fiscal support as the augmented unemployment benefits from the CARES Act is set to expire at the end of the month.

“Both Republicans and Democrats have a strong incentive to agree upon further pre-election stimulus. It’s not a matter of ‘if’ a stimulus passes, it’s just what the size and content of that package looks like,” Andrea Bevis, senior vice president, UBS Private Wealth Management, told Reuters.

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