U.S. markets and stock ETFs strengthened Friday but were on pace for their fourth consecutive week of declines as uncertainties over the economic recovery and political uncertainty ahead of the presidential elections weighed on risk sentiment.
On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) increased 1.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was up 0.6% and iShares Core S&P 500 ETF (NYSEArca: IVV) rose 0.9%.
“You’ve had this nice recovery through the summer, and coming into the fall, the economy is just a little bit more vulnerable, particularly with a lot of the stimulus that we had starting to taper off now,” Mike Dowdall, portfolio manager at BMO Global Asset Management, told Reuters.
The coronavirus pandemic is also back in focus as new infections across the U.S. and Europe weigh on the global economic recovery outlook.
“We’re in a bit of a holding pattern. It feels like a bit of a phony market right now. I don’t think there’s any key factors that have changed,” David Coombs, head of multiasset investments at Rathbone Brothers, told the Wall Street Journal. “Until we get a vaccine for the population at large, the coronavirus course is uncertain.”
Investors have been waiting in vain for another economic stimulus package to bolster the slowing recovery process. House Democrats are working on a scaled-down version of around $2.4 trillion that would include assistance to airlines, restaurants, and small businesses. However, Republicans warned that the chances of a deal before Election Day was unlikely.
“We’ve had such a huge fiscal response already, it’s easy to say the response now is disappointing,” Holger Schmieding, chief economist at Berenberg Bank, told the WSJ. “It’s basically a matter of time: before or after the election. Significant support is coming. The Fed is asking for it.”
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