The S&P 500 trimmed gains after the Fed promised to keep funnelling cash into financial markets
Wall Street remained mixed on Wednesday, with the Nasdaq hitting a record high as investors awaited a potential fiscal economic stimulus package and after the Federal Reserve repeated a pledge to keep its benchmark interest rate near zero.
The S&P 500 trimmed gains after the Fed promised to keep funnelling cash into financial markets to fight the recession, even as policymakers’ outlook for next year improved following initial rollout of a coronavirus vaccine.
I don’t think there’s anything in there that changes their accommodative stance. The market’s reaction is relatively subdued, said Randy Frederick, vice president of trading and derivatives for Charles Schwab.
Frederick said investors are more focused on fiscal stimulus than the Fed statement following its two-day meeting.
The expectations for stimulus are built in, so if we don’t get one that would be a much more substantially negative reaction that if we get one, which would be very modestly positive, he said.
Gains in tech stocks, many of which have benefited from changes in consumer habits because of the pandemic, pushed the Nasdaq to a record high before it trimmed its gains. Microsoft surged over 2%.
Investor sentiment has oscillated in recent sessions between optimism about the early distribution of a COVID-19 vaccine and worries about record infection rates in the United States. Despite the pandemic, the S&P 500 has climbed over 14% in 2020.
U.S. congressional negotiators were “closing in on” a $900 billion COVID-19 aid bill that will include $600 to $700 stimulus checks and extended unemployment benefits, and Congress could start voting within 24 hours, lawmakers and aides said.
Data showed U.S. retail sales fell 1.1% last month from October, as new coronavirus infections and decreasing household income weighed on spending.
The S&P 500 airlines index dropped 2% after JPMorgan issued multiple downgrades in the sector, citing valuations.
Southwest Airlines Co fell over 2% after flagging a higher cash burn in the fourth quarter, as well as increased trip cancellations in December.
Alphabet dipped 0.6% after Texas Attorney General Ken Paxton said he will file a multi-state lawsuit against the parent company of Google.