S&P 500 inches greater amid financial hopes, Fed dedication to proceed to help the financial system
The S&P 500 rose slightly on Wednesday on the Federal Reserve’s recent pledge to support the economy and apparent progress in negotiations on US stimulus packages.
The broader market index closed 0.2% higher at 3,701.17, which is just below a record high. The Nasdaq Composite was up 0.5% to end the day at 12,658.19, hit during the day and closed all-time highs as Apple and Microsoft each gained more than 2%. The Dow Jones Industrial Average lagged, falling 44.77 points, or 0.15%, to 30,154.54.
The US Federal Reserve announced that it would purchase bonds worth at least $ 120 billion each month “until substantial further progress is made in meeting the committee’s maximum employment and price stability targets.” The Fed declined to make changes to the duration of its bond purchase program, but Chairman Jerome Powell said the central bank would increase asset purchases if the economic recovery slows.
“The FOMC appears very committed to its current plan of action, and there is no evidence that the stronger-than-expected economic recovery or the promise of an effective vaccine roll-out has helped dampen their enthusiasm,” said Michael Shaoul, chairman and Marketfield Asset Management CEO, on a note.
Powell added that he doesn’t think stocks are necessarily expensive in the face of low interest rates.
Progress on fiscal incentives
The leaders of Congress signed a $ 900 billion bailout deal that would include a new round of direct payments to consumers. However, that package excludes corporate liability coverage and state and local aid, CNBC has confirmed. Politico reported the news first.
The news came after House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, and House Minority Leader Kevin McCarthy met on Tuesday to finalize a bipartisan aid agreement. Treasury Secretary Steven Mnuchin attended the talks.
“I am optimistic that we can reach an agreement soon,” said McConnell on Tuesday evening after the meeting. Schumer said the leaders were “making progress and hopefully we can reach an agreement soon.”
“Stimulus remains a key issue in the marketplace as it is the necessary bridge to expansive vaccination,” Lindsey Bell, chief investment strategist at Ally Invest, told clients. “Market participants want a deal sooner rather than later as economic data is expected to slow in the short term. Without a deal, the turmoil could intensify.”
The deadline for the stimulation looms amid some of the darkest days of the pandemic. The U.S. has at least 212,000 new Covid-19 cases and at least 2,400 virus-related deaths every day, based on a seven-day average calculated by CNBC using data from Johns Hopkins University.
Wednesday’s moves were held in check by an unexpectedly sharp drop in US retail sales. Retail sales fell 1.1% in November, according to the Commerce Department. Economists polled by Dow Jones expected a decline of 0.3%.
“The bottom line is that following disappointing sales data, expect a cut in fourth quarter GDP forecast,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Now that we are on the verge of giving more money out, this should help in the months ahead, but if things are not open, only online.”
Wall Street had a tough session with its major averages all up more than 1%.
Subscribe to CNBC PRO for exclusive insights and analysis as well as live business day programs from around the world.
– CNBC’s Jacob Pramuk contributed to this report.