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U.S. Stock ETFs Advance as Strong Economy, Earnings Offset Coronavirus Fears

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U.S. markets and stock ETFs as investors looked beyond the coronavirus fears and refocused on the strength in the domestic economy.

On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.7%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was 0.2% higher and SPDR S&P 500 ETF (NYSEArca: SPY) rose 0.3%.

“Some people think the outbreak may have a very decelerating impact on growth in China specifically,” Peter Kenny, founder at Kenny’s Commentary LLC and Strategic Board Solutions LLC, told Reuters. “But at the end of the day, corporate earnings and U.S. economic data are very strong and we’re seeing more of that confidence being priced into stock performances.”

The strong earnings season has helped lift U.S. markets to record highs. Of the 324 S&P 500 companies that reported results so far, about 71% beat earnings estimates, or more than the long-term average of 65%, according to IBES data from Refinitiv.

A healthy U.S. may also help the domestic economy weather any potential storms. For instance, a jobs report Friday revealed U.S. hiring rose in January as more Americans joined the labor market.

“It’s really a tug-of-war between good solid earnings growth, employment prospects in the United States versus the China issue related to the coronavirus,” Joe Quinlan, head of CIO Market Strategy for Merrill and Bank of America Private Bank, told the Wall Street Journal. “The two largest economies in the world, they’re tacking in different directions in the near term.”

Nevertheless, there are lingering concerns that the virus outbreak will deal a blow to China’s economy as Beijing curtails travel and limits business operations in an attempt to contain the spread of the coronavirus.

“While events like the virus news from China might move the volatility up, I don’t think we’re coming back to the volatility levels we’ve seen in previous years,” Ulrich Leuchtmann, head of foreign-exchange research at Commerzbank, told the WSJ.

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