SPY & QQQ Tumble: IRS Standard Deduction Boost Fails to Lift Markets Amid Gaza Peace Progress

Major ETFs stumble despite tax break optimism and geopolitical developments.

Market Momentum Stalls

The IRS standard deduction increase couldn't prevent SPY and QQQ from declining, showing even government incentives struggle against market headwinds. Peace progress in Gaza typically fuels risk-on sentiment, but today's trading tells a different story.

Tax Breaks Meet Reality

That IRS boost looked great on paper—until markets decided paper profits beat actual policy benefits. Standard deduction increases usually spark spending optimism, but investors clearly wanted more substantial catalysts.

Geopolitical Calculus

Gaza peace developments typically drive bullish momentum, yet these ETFs ignored the traditional playbook. Sometimes markets treat good news like a tax refund—immediately spent elsewhere.

Another day where Wall Street proves it can turn silver linings into cloud cover—because why make money the easy way when you can overcomplicate everything?

Elevate Your Investing Strategy:

• Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.

The path to reopening the government remains clouded as the closure extends to a ninth day, with a pair of funding bills struck down by the Senate once again. Afterward, President TRUMP accused Democrats of “using health care as a cudgel” and threatened to make permanent cuts to Democratic programs. “I hate to tell you, I guess that makes sense, but we’re only cutting Democrat programs,” Trump said.

On the other hand, the prospects of resolving the war in Gaza gained momentum after Israel and Hamas signed what President Trump called the “first phase” of a peace deal. The terms include the release of all hostages and a ceasefire.

“This means that ALL of the Hostages will be released very soon, and Israel will withdraw their Troops to an agreed upon line as the first steps toward a Strong, Durable, and Everlasting Peace,” Trump said in a Truth Social post.

Meanwhile, the prices of consumer durables and personal goods increased by 0.58% in September, rising for a tenth consecutive month, according to data from OpenBrand. Personal care and communication goods drove the increase, both rising by 0.76% month-over-month. That was likely due to the ending of the “de minimis” exemption in August, which allowed duty-free entry for goods worth less than $800. Items that were likely exempt from de minimis treatment prior to its removal, like appliances, “saw price deceleration in September, a possible sign that the impacts of tariffs on these product groups may be starting to wane,” said OpenBrand.

The IRS announced changes for the 2026 tax year, potentially providing tax relief to millions of Americans. The agency raised the standard deduction to $16,100 from $15,750 for single filers and $32,200 from $31,500 for married couples filing jointly. Furthermore, the agency lifted marginal tax bracket thresholds for both single filers and married couples filing jointly, while the maximum tax rate remained steady at 37%.

The S&P 500 (SPX) closed with a 0.28% loss, while the Nasdaq 100 (NDX) fell by 0.15%.