ETFs

U.S. Stock ETFs End a Choppy Session as Fed Minutes Sink In

U.S. markets and stock exchange traded funds seesawed throughout Wednesday's session as the Federal Reserve's latest policy meeting reaffirmed their commitment in supporting the economic recovery.

On Wednesday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.1%, and iShares Core S&P 500 ETF (NYSEArca: IVV) was 0.1% higher.

Fed officials maintained their patient view, saying it would likely take “some time” for substantial further progress to hit maximum employment and stable prices, Reuters reports.

Market gains, though, were muted as many observers remain doubtful over the Fed's interest rate stance, especially in face of rising inflation expectations. Some are concerned that the economic rebound fueled by aggressive government spending could push the Fed to pull back on support of the economy and markets earlier than expected.

“Everyone is trying to figure out what the Fed is going to do and the futures markets think the Fed is going to raise rates earlier than the Fed says they are going to,” Thomas Martin, senior portfolio manager at Globalt Investments, told Reuters. “That is going to take a while to work out, the market has been wrong before but also the Fed has followed the market before.”

Technology and growth stocks have also been on the mend after underperforming in recent weeks as new restrictions in Canada and parts of Europe renewed concerns over a broad global recovery.

Nevertheless, the markets are looking toward the gradual recovery process, despite the short-term uncertainties.

“We had been expecting the data to improve about this time, and early signals are that the recovery is absolutely on track,” Hugh Gimber, global market strategist at J.P. Morgan Asset Management, told the Wall Street Journal. “This is the period where the forecast of a strong recovery in growth is starting to look more like the fact of a strong recovery in growth.”

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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