Wall Street has seen a lot of turbulences in 2020 so far and Nov 3 elections are just adding to the uncertainties. However, there have been bright spots, for instance, a spectacular August for the Dow and the S&P 500 since 1984 and 1986, respectively. Also, positive developments with respect to the coronavirus vaccine, Fed’s support, U.S. fiscal stimulus and a rebounding U.S. economy with an improving job market have kept investors’ optimistic amid the crisis.
Meanwhile, market participants have been increasingly worried about a spike in new coronavirus cases in several countries in Europe and some U.S. states, lack of vaccine or a line of treatment for coronavirus and uncertainty regarding a fresh round of fiscal stimulus from the U.S. government. Moreover, Trump testing positive for coronavirus shook markets and made investors increasingly apprehensive. However, Trump’s improving health condition and his return to the White house from the Walter Reed National Military Medical Center have calmed investors to an extent.
In the current situation, analysts believe that the market’s worst is largely over as negative estimates have already been factored into the valuations. Moreover, despite the lack of a second round of stimulus package amid an aggravating coronavirus outbreak, the economy is still growing, though at a slow pace.
Given the current scenario, investors are desperately looking for opportunities for their portfolios that can help them gain despite the political and health uncertainties. Against this backdrop, let’s look at some factors that are favoring investment in the momentum ETFs:
Reduced Election Uncertainty
Following the first of the three presidential debates in Cleveland, things seem to be in favor of Mr. Joe Biden. According to data from Smarkets, Biden’s chances of winning are now pegged at 62%, while odds in favor of Trump are at 38%, per a Yahoo Finance