Market Snapshot: U.S. stocks flatline on decision day for Fed and fiscal stimulus

Market Snapshot

Last Updated: Dec. 16, 2020 at 10:31 a.m. ET

First Published: Dec. 16, 2020 at 7:30 a.m. ET

U.S. Nov retail sales fall 1.1%

Federal Reserve Chairman Jerome Powell

Eric Baradat/Agence France-Presse/Getty Images

U.S. stocks were bouncing between fractional gains and losses Wednesday as lawmakers in Washington continued to try to reach agreement on another round of financial aid to combat the economic impact of the coronavirus pandemic and investors awaited a new round of guidance from the Federal Reserve.What are major benchmarks doing?
The Dow Jones Industrial Average
DJIA,
-0.13%
was 10 points higher, near 30,209.

The S&P 500 index
SPX,
0.10%
gained 5 points, 0.1%, to 3,700.

The Nasdaq Composite
COMP,
0.21%
was up 2 points to 12,597.

Stocks ended broadly higher Tuesday, with the Nasdaq Composite closing at a record.
The Dow
DJIA,
-0.13%
advanced 337.76 points, or 1.1%, to finish at 30,199.31.

The S&P 500
SPX,
0.10%
rose 47.13 points, or 1.3%, ending at 3,694.62.

The Nasdaq Composite
COMP,
0.21%
closed at 12,595.06, a gain of 155.02 points, or 1.2%.

What’s driving the market? Optimism continued to run high over prospects for another fiscal relief package after top lawmakers from both parties met face-to-face late Tuesday, though the negotiations showed few clear signs of progress.

“Stimulus remains a key focus for the market, as it is the necessary bridge to expansive vaccinations,” said Lindsey Bell, chief investment strategist for Ally Invest, in a note. “Market participants would like to see a deal sooner rather than later given the expectation for economic data to slow near-term. In the absence of a deal, turbulence could pick up,” she said. See: Americans stick near home again due to coronavirus resurgence in fresh blow to the economy Katie Stockton, a market technician and founder of Fairlead Strategies, thinks the rotation from growth stocks to value stocks that began in earnest in November is confirmation of a healthy market. “From an intermediate and long-term perspective, it’s bullish,” she told MarketWatch, “reflective of a strong uptrend on the back of an important market low.” While Stockton expects a short-term pullback in January, in the near term “there are positive seasonal influences,” she said. Momentum has faltered, but “a day like Tuesday shows market resiliency.” Investors may rotate into defensive plays like consumer staples
XLP,
0.40%
as part of the January drawdown Stockton expects. “We’re looking for the uptrend to resume on the back of that, so be buyers of that weakness,” she said. Investors have focused on the rollout of a COVID-19 vaccine developed by Pfizer Inc.
PFE,
-1.94%
and BioNTech SE
BNTX,
-3.82%
and rapid progress toward other vaccines, which comes as the pandemic has intensified but may help to revive the economy in 2021. The U.S. saw 201,649 new cases on Tuesday, and at least 2,957 new deaths, according to a New York Times tracker. The U.S. has averaged 206,557 cases per day over the past week, a 28% increase from the average two weeks earlier. There were 112,816 COVID-19 patients in U.S. hospitals on Tuesday, according to the COVID Tracking Project, setting a daily record for the 10th straight day. The Fed is likely to take center stage later Wednesday, though no significant changes to policy are expected from its meeting. Investors will be looking for any additional guidance on the central bank’s asset-buying program and will parse the latest round of economic forecasts. The policy-making Federal Open Market Committee is due to issue a statement at 2 p.m. Eastern, followed by Powell’s news conference at 2:30 p.m. See: 4 things to watch for when the Fed meets Wednesday It’s also a busy day for U.S. economic data. November retail sales figures showed a 1.1% slide during the month, dwarfing the 0.4% decline forecast by economists surveyed by MarketWatch. Purchasing managers index readings from IHS Market showed the impact of the pandemic on the services sector, while data on October business inventories showed intensifying stockpiling. A December reading for a home builders’ index showed sentiment retreated during the month. See: Stock-market uncertainty runs high headed into Fed’s Wednesday meeting Which companies are in focus?
Shares of Quest Diagnostics Inc.
DGX,
-1.00%
were 1.3% lower after the clinical lab testing company raised its full-year profit, revenue and cash flow outlook, citing “significantly higher” COVID-19 testing volumes compared with what was expected earlier.

Southwest Airlines Co.
LUV,
-2.24%
shares fell 2.1% in early trade after the air carrier said November load factor came in below previous expectations and raised its fourth-quarter estimate for average daily cash burn.

Shares of Tilray Inc. 
TLRY,
22.38%
jumped 23% and Aphria Inc.’s U.S.-listed stock
APHA,
2.19%
  gained 3.4% after the two cannabis companies announced a merger,

What are other markets doing? The yield on the 10-year Treasury note
TMUBMUSD10Y,
0.923%
 rose 1.4 basis points to 0.927% on expectations of more fiscal stimulus. The ICE U.S. Dollar Index,
DXY,
-0.22%
 a measure of the currency against a basket of six major rivals, was off 0.2% to 90.29. The pan-European Stoxx 600 Europe index
SXXP,
0.66%
was up 0.7% and London’s FTSE 100 benchmark
UKX,
0.68%
gained 0.6%. Oil futures were down 0.8% one day after settling at a more than nine-month high, with expectations of greater economic activity offset by rising inventories. The U.S. benchmark
CL.1,
-0.57%
 traded near $47.21 a barrel. Gold futures
GCG21,
0.25%
 for February were virtually unchanged, near $1,855.20 an ounce, as traders waited for signals on fiscal stimulus and Brexit talks. Read next: Here’s how trendy ETFs can do double-duty in your portfolio

                  

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