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Stock ETFs Start Week with New Highs

Stocks and index ETFs climbed to fresh highs on Monday, continuing last week’s rally, as investors hope that additional coronavirus stimulus will lead to an economic recovery.

The Dow Jones Industrial Average rallied 0.47% to a fresh all-time high, while the S&P 500 added 0.5%, also notching a new high by driving past 3900 for the first time. The Nasdaq Composite rallied 0.6% meanwhile, to tag a new intraday record.

Major stock ETFs are rallying on Monday as well. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are all higher just before 12:30 PM EST.

The key benchmarks weren’t the only indexes to reach new all-time levels. The small-cap heavy Russell 2000 popped 1.8% to score another record high, after adding 7.7% last week for its most successful weekly performance since June. The Russell 2000 has rocketed 15% so far this year, helping to boost ETFs like the Principal U.S. Small-Cap Multi-Factor Index ETF (NASDAQ: PSC).

Optimism from New Treasury Secretary Janet Yellen

Investors are invigorated by news that Treasury Secretary Janet Yellen asked Congress to pass President Biden’s stimulus plan this weekend, suggesting that the results of the bill could include the U.S. gaining full employment by next year.

“There’s absolutely no reason why we should suffer through a long slow recovery,” Yellen said during an interview on CNN’s “State of the Union.” “I would expect that if this package is passed that we would get back to full employment next year.”

Analysts are sanguine that stocks and index ETFs are likely to continue to rise, amid vaccine distribution and improving infection rates in some areas.

“We are still very much in a bull market at the early stages of an economic recovery that’s gaining momentum,” Michael Wilson, chief U.S. equity strategist at Morgan Stanley, said in a note. “We continue to recommend stocks with the most upside to an improving economic backdrop as the vaccines are distributed and normal activities resume.”

After pushing aside worries of a speculative trading bubble, key benchmark stocks and index ETFs major averages focused on additional stimulus and vaccine measure to finish their best week since November. The S&P 500 closed at a record high on Friday. The Dow and the Nasdaq Composite popped 3.6% and 5.4%, respectively, in the prior week.

“While the economy is likely in a short-term stall as vaccinations roll through the population, it would take an epic unforeseen failure in the rollout of the various vaccines to prevent the domestic and economic engine from ramping greater than most expect,” Tony Dwyer, chief market strategist at Canaccord Genuity, said in a note.

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