Stock futures opened little changed Wednesday evening, with stimulus talks in Washington still at the center of investors’ attention.
During the regular session, the Nasdaq ended at a record high and the S&P 500 closed just short of a record high of its own, while the Dow edged slightly lower. Traders have hoped that congressional lawmakers will succeed in coming to a deal to provide a virus-relief package to small businesses and Americans across the country by the end of the week, ending a months-long stalemate over more aid.
Negotiators including Senate Majority Leader Mitch McConnell, House Speaker Nancy Pelosi, Senate Democratic leader Chuck Schumer and House Republican leader Kevin McCarthy convened again on Wednesday to discuss the package, which is expected to total around $900 billion and include direct checks to Americans and enhanced federal unemployment benefits. It will likely be attached to the broad government funding bill for the fiscal year, which must be advanced by a Friday deadline to avoid a partial government shutdown.
The Federal Reserve on Wednesday doubled down on its own commitment to use its monetary policy tools to support the virus-stricken economy. Central bank officials said they would continue the Fed’s asset purchase program at the current rate “until substantial further progress has been made toward the committee’s maximum employment and price stability goals,” leaving open the possibility that the central bank’s quantitative easing will continue throughout and potentially beyond the post-pandemic economic recovery.
“The Fed did not take their foot off the gas quite yet as they decided to maintain the current pace of the asset purchase program,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said in an email Wednesday. “The Fed has made it clear that downside risks to the economy still persist in the coming months despite what financial markets may be signaling with risk assets performing well and stocks near record highs.”
The economic data has already showed signs of the toll the latest surge in coronavirus cases has had on the economy. Retail sales plunged by the most in seven months in November, and Thursday morning’s jobless claims report is expected to show another more than 800,000 Americans filed for first-time unemployment benefits last week.
Equity investors, however, have largely kept looking through near-term risks to the economy and ahead to the expected 2021 recovery as a vaccine enables broader business reopenings.
“The market is clearly anticipating that the rollout of the vaccine will go smoothly and the market is clearly anticipating that earnings surprises from corporations will continue to be maintained,” Kirk Hartman, Wells Fargo Asset Management global chief investment officer, told Yahoo Finance on Wednesday. “And I hope all those things continue, but you do have to have a little bit of concern about risk given where these markets are.”
“Given all the stimulus, the bond purchases, the maintenance of rates at zero, I think you are going to get a boost in the markets at the beginning of the year,” he added. “And my recommendation would be once you get that boost then I would look to pare it back. But it’s hard to argue with these fundamentals here, there’s so much money in the system and clearly, the Fed indicated today that it was going to continue.”
6:00 p.m. ET Wednesday: Stock futures begin the overnight session little changed
Here were the main moves in markets, as of 6:00 p.m. ET Wednesday:
S&P 500 futures (ES=F): 3,702.5, up 1.75 points or 0.05%
Dow futures (YM=F): 30,182.00, up 21 points or 0.07%
Nasdaq futures (NQ=F): 12,673.75, up 8.5 points or 0.07%
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