U.S. markets and stock ETFs pare early morning losses after a spike in coronavirus cases added to concerns that reopening the economy may have been premature.
On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.4%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) was 0.2% lower and SPDR S&P 500 ETF (NYSEArca: SPY) was up 0.1%.
An unexpected jump in COVID-19 cases in China pushed Beijing to reinstate curbs while many feared the U.S. could restore shutdown measures on rising cases in more states, Reuters reports.
“When we see a pullback like today, it’s just the enthusiasm dying down a little bit and people waiting to get a better understanding of this increase in infection rates,” Anthony Denier, chief executive officer of online broker Webull Financial LLC, told Reuters.
Chinese authorities shut down parts of Beijing after the capital saw a record number of new infections. Meanwhile, several U.S. states showed a rise in the number of cases over the past week with the total number of cases crossing over 2 million last week, the Wall Street Journal reports.
“The timeline for the virus is being extended. It’s becoming clear that it’s a choice of allowing economies to open and take the public health hit, or lockdown countries and take the economic hit,” Edward Park, deputy chief investment officer at Brooks Macdonald, told the WSJ.
While U.S. markets have surged with the help of trillions of dollars in monetary stimulus and fiscal easing measures, many are still worried about the economic outlook, especially after the Federal Reserve warned of a protracted period of weakness.
“The selloff since last week’s high is a reminder that we are not out of the woods yet. We expect a range-bound, choppy market for some time,” David Bahnsen, chief investment officer, The Bahnsen Group, told Reuters.
Looking ahead, investors will be watching on Tuesday for Fed Chair Jerome Powell’s two-day congressional testimony on the monetary policy report.
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