- US equities dipped slightly on Wednesday as investors weighed progress towards a stimulus compromise against disappointing economic data.
- Congressional leaders are close to agreeing on a stimulus package that includes just under $US900 billion in relief funds, according to Politico. The deal could be finalised as early as Wednesday morning.
- Spending at US retailers contracted 1.1% in November, the Census Bureau announced Wednesday. Economists expected a drop of just 0.3%. October’s preliminary 0.3% gain was revised to a 0.1% drop.
- Investors will look to the Federal Reserve Wednesday afternoon for updates to the central bank’s monetary policy strategy. Officials are expected to either update their asset purchase program or reveal new guidance for its purchases.
- Watch major indexes update live here.
US stocks climbed on Wednesday as bets on a stimulus breakthrough counteracted worsening economic data.
Congressional leaders are close to reaching a deal on a stimulus package with a price tag of nearly $US900 billion, Politico reported. The measure is expected to omit pandemic-related liability protections and state and local government aid, 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 finalised 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 the federal government shuts down.
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Wednesday:
- S&P 500:3,689.54, down 0.1%
- Dow Jones industrial average: 30,151.40, down 0.2% (48 points)
- Nasdaq composite:12,578.47, down 0.1%
The leap forward in stimulus talks cushioned the blow from worse-than-expected retail sales data. Spending at US retailers contracted 1.1% in November, according to Census Bureau data published Wednesday. Economists 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 snaps a five-month growth streak for retail sales and signals strong e-commerce spending on Black Friday wasn’t enough to offset weakness throughout the month. November saw US coronavirus cases continue to reach record highs and state and local governments reinstate lockdown measures to slow the virus’s spread. With COVID-19 still raging across the country, the Wednesday reading hints at additional economic pain heading into the new year.
“These data are materially weaker than expected so you should expect to see downward revisions to fourth-quarter growth. And the risk of an outright contraction in GDP in the first quarter is increasing,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.
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Investors will look to the Federal Reserve later in the day for an update to the central bank’s monetary policy plans. The Federal Open Market Committee will conclude its two-day meeting Wednesday afternoon and is expected to announce changes to or new guidance for its asset purchase program. JPMorgan expects the bank to extend the average maturity of its Treasury purchases to push long-term rates lower and further boost spending.
Aphria and Tilray both rallied after the firm’s announced plans to merge and form the world’s largest cannabis company. The combined entity will boast a valuation of roughly $US3.9 billion and industry-leading revenue of $US685 million over the last 12 months.
Bitcoin surged above $US20,000 for the first time ever, hitting a 24-hour high of $US20,410.56. The cryptocurrency nearly breached the resistance level earlier in the month before profit-taking dragged it from all-time highs.
Gold gained 0.7%, to $US1,865.82 per ounce.
The US dollar weakened against a basket of Group-of-10 currencies ahead of the Fed’s policy announcement. Treasury yields climbed.
Oil prices dipped slightly. West Texas Intermediate crude fell as much as 0.5%, to $US47.38 per barrel. Brent crude, oil’s international benchmark, slid 0.5%, to $US50.49 per barrel, at intraday lows.
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