U.S. markets and stock exchange traded funds were at record highs on Thursday, with technology taking the lead, as traders looked for more coronavirus stimulus under a Democrat-controlled government.
On Thursday, the Invesco QQQ Trust (NASDAQ: QQQ) rose 2.8%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 1.4% and iShares Core S&P 500 ETF (NYSEArca: IVV) gained 1.4%.
The markets were anticipating President-elect Joe Biden to call for a bigger fiscal package and raise infrastructure spending to further stimulate an economy that is still impeded by a resurgence in coronavirus cases.
“You’re seeing a reflation trade on the assumption that a more progressive and aggressive fiscal stimulus packages could be in the offing,” Keith Buchanan, portfolio manager at GlobAlt, told Reuters.
Technology stocks were among the standouts on Thursday as the sector regained lost ground in the prior session’s selling on fears of increased regulation and corporate taxes under a Democrat-controlled Congress.
Investors also largely brushed off Wednesday’s violent clash on Capitol Hill between pro-Trump protestors and law enforcement and focused on the shift in political power from Republicans to Democrats.
“It’s not going to affect the transition of power, and as long as that is the case, I think investors will ignore it,” Edward Smith, head of asset allocation research at U.K. investment firm Rathbone Brothers, told the Wall Street Journal
Looking at the economy, the number of Americans filing for jobless benefits unexpectedly fell last week but remained elevated, according to a Labor Department report. The job market recovery appears to have stalled as COVID-19 continues to weigh on the country.
“With more stimulus coming, even if we do have a miss on claims, it’s going to be a little bit less severe, because we know there’s going to be a bigger back up for those who are recently unemployed,” Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, told Reuters.
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