QQQ, SPY, DIA Maintain Momentum on Steady Inflation Data
This article was originally published on ETFTrends.com.
U.S. stocks and related ETFs maintained their forward climb after the Labor Department revealed February inflation data was in line with estimates, supporting bets that the Federal Reserve will maintain its dovish stance on future rate hikes.
On Tuesday, the Invesco QQQ Trust (QQQ) was up 0.4%, SPDR Dow Jones Industrial Average ETF (DIA) was 0.4% lower and SPDR S&P 500 ETF (SPY) rose 0.3%.
Markets straightened on new data that confirmed inflationary pressures remained tame, which helped reassure investors that the Fed will continue to hold off on further rate hikes. The Labor Department revealed its Consumer Price Index rose 0.2% for February and rose 1.5% in the 12 months ended February, the smallest gain since September 2016, Reuters reports.
“The CPI numbers are suggestive of a patient Fed and ultimately that bodes well for the market,” Ryan Larson, head of U.S. equity trading at RBC Global Asset Management, told Reuters.
Weak inflation has been a major factor in the Fed's decision to hold back on tightening its monetary policy.
Nevertheless, moves in the markets were listless after the S&P 500 and other major indices experienced their worst week of the year last week.
Additionally, some money managers were bracing for another round of volatility with the Brexit vote on the line.
“Investors are watching with interest to see the outcome of the Brexit vote today as it has been one of the uncertainties in the market that has been persistent,” Larson added.
“There’s a bit of caution from investors in today’s market,” Sean O’Hara, director of Pacer Financial, told the Wall Street Journal, pointing to a downtick in trading volume and money flows data Tuesday. “There’s a lot of people who are still waiting to see what direction the market goes from here.”
During late trading, Britain’s Parliament defeated Prime Minister Theresa May’s plan to exit the European Union by a 391 to 242 vote that is likely to delay Brexit and could derail it entirely, the New York Times reports. The vote left the country with no obvious road ahead with just 17 days before the deadline for leaving the European Union.
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