Tech stocks boosted the S&P 500 and Nasdaq composite
US stocks closed mixed on Wednesday as investors digested the Federal Reserve’s December update and stimulus progress. While the Nasdaq composite index finished at a record and the S&P 500 ended up just shy of all-time highs, the Dow Jones industrial average slid.
The Federal Open Market Committee decided to hold rates near zero and maintain the current pace and composition of their asset purchases. Policymakers indicated the $120 billion in monthly purchases will continue until “substantial further progress” is made toward reaching maximum employment and healthy inflation.
Economic projections from Fed officials were revised higher. The central bank’s median estimate sees GDP growing 4.2% in 2021, completely offsetting this year’s pandemic-induced slump. Unemployment is expected to fall to 5% through 2021 and reaching pre-pandemic lows in 2023.
Rising tech stocks boosted the S&P 500 and Nasdaq composite. Utilities and industrials underperformed.
Congressional leaders inched closer to compromising on a nearly $900 billion stimulus proposal, Politico reported. It’s expected to omit pandemic-related liability protections for businesses and aid for state and local governments, the two most contentious elements under discussion. More-popular measures including a second round of direct payments and small-business relief are set to be included.
A deal could be finalized as early as Wednesday morning, sources briefed on the negotiations told Politico. Lawmakers have until the end of the week to pass new fiscal support and a funding bill before a government shutdown. The leap forward in stimulus talks cushioned the blow from retail-sales data that was worse than expected. Spending at US retailers contracted by 1.1% in November, the Census Bureau said Wednesday. Economists had expected sales to fall by 0.3%.
October’s reading was revised to a 0.1% drop from the preliminary reading of 0.3% growth.
The report snapped a five-month growth streak for retail sales and signalled that strong e-commerce spending on Black Friday wasn’t enough to offset weakness throughout the month. US coronavirus cases reached record highs in November, and some states and local governments reinstated lockdown measures to slow the virus’ spread. With COVID-19 still raging across the country, the Wednesday reading hints at economic pain heading into the new year.
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