Nasdaq hits record as Fed holds, coronavirus stimulus talks gain steam

Retail sales fell 1.1% month over month in November

U.S. equity markets ended mixed Wednesday with the Nasdaq Composite hitting a record high as investors weighed the Federal Reserve’s decision to keep policy on hold and as they awaited on firm details of a COVID-19 stimulus deal.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 43986.76 -640.83 -1.44%
SP500 S&P 500 6092.42 -51.73 -0.84%
I:COMP NASDAQ COMPOSITE INDEX 19883.595543 -172.66 -0.86%

The Dow Jones Industrial Average fell 44 points, or 0.15%, while the S&P 500 and the Nasdaq gained by 0.18% and 0.55%, respectively.

FED HOLDS, PROMISES LOW RATES THROUGH 2023

The Federal Reserve held interest rates near zero, where they will likely stay through 2023, at its final meeting of the year and left its asset-purchase program unchanged at $120 billion per month. The central bank said there is high uncertainty surrounding its economic forecast, which calls for gross domestic product to decline by 2.4% this year and for the unemployment rate to fall to 5% next year.

As for economic forecasts, the Fed now projects GDP of 4.2% next year up 0.2% from September projections.

COVID-19 STIMULUS TALKS DRAG ON 

Meanwhile, negotiations between Democrats and Republicans on coronavirus relief are “getting closer and closer” to a deal, Senate Majority Leader Mitch McConnell of Kentucky said late Tuesday.

A proposed $908 billion package is gaining some momentum. The package is broken up into two parts – a $748 billion bill that includes additional Paycheck Protection Program funding and unemployment benefits, and a $160 billion bill that provides funding for state and local governments and liability protections for businesses. Still, lawmakers were grappling over the size of potential direct payments to individuals.

STOCK BULLS NEED BREATHER AS COVID-19 VACCINE ROLLS OUT

Looking at stocks, Southwest Airlines Co. said Wednesday that it plans to take delivery of 35 Boeing 737 Max aircraft by the end of 2021 and that plane should rejoin its fleet in March. The company said rising cancellations in December will lead to a cash burn of about $12 million per day in the fourth quarter, up from $10 million to $11 million.

Ticker Security Last Change Change %
LUV SOUTHWEST AIRLINES CO. 30.12 -0.07 -0.25%
BA THE BOEING CO. 180.66 -5.45 -2.93%

In mergers and acquisitions, Canadian cannabis producers Aphria Inc. and Tilray Inc. have agreed to merge their operations, creating a company valued at 5 billion Canadian dollars ($3.9 billion). The new company, which will trade under Tilray’s ticker, will have a 62% ownership by Aphria shareholders, who are paying a 23% premium for Tilray shares.

Ticker Security Last Change Change %
TLRY TILRAY BRANDS INC. 0.86 -0.02 -1.89%
APHA NO DATA AVAILABLE - - -

Elsewhere, gunmaker American Outdoor Brands reported quarterly sales soared 66% from a year as demand for firearms surged as more people spent time enjoying outdoor activities, like hunting, amid the pandemic.

Ticker Security Last Change Change %
AOUT AMERICAN OUTDOOR BRANDS INC. 16.49 -0.50 -2.94%

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Twitter Inc. was upgraded to “overweight” at J.P. Morgan, which raised its price target to $65 per share from $52, citing strong sustainable growth at U.S. Internet companies. Other companies receiving price-target hikes from J.P. Morgan included Alphabet Inc., Snap Inc. and Uber Technologies Inc.

Ticker Security Last Change Change %
TWTR NO DATA AVAILABLE - - -

Chinese streaming-video company iQiyi Inc.’s shares were sharply lower after the company announced a secondary offering of convertible notes and American depository shares.

TESLA STOCK'S S&P 500 ENTRY TO DRIVE TSUNAMI OF TRADING VOLUME

Economic data out Wednesday morning showed retail sales fell 1.1% month-over-month in November, worse than the 0.3% drop that analysts surveyed by Refinitiv were expecting.

Ticker Security Last Change Change %
WMT WALMART INC. 97.56 -6.42 -6.18%
TGT TARGET CORP. 128.85 -1.90 -1.45%
AMZN AMAZON.COM INC. 222.76 -3.87 -1.71%

Looking at commodities, West Texas Intermediate crude oil added 20 cents to $47.82 per barrel while gold edged up $3.80 to $1,856.10 per ounce.

European markets were higher across the board with Germany’s DAX 30 up 1.52%, Britain’s FTSE 100 rising 0.88% and France’s CAC 40 gaining 0.31%.

In Asia, Hong Kong’s Hang Seng index rallied 0.97%, Japan’s Nikkei 225 climbed 0.26% and China’s Shanghai Composite ticked down 0.01%.