Wall Street set to tick higher as stimulus hopes grow

Wall Street was set to extend gains on Wednesday tracking further progress toward a bumper coronavirus stimulus package, while markets hoped for an affirmation of continued easy monetary policy from the Fed’s last meeting for the year.

U.S. congressional leaders reported substantial progress toward a spending bill late on Tuesday, bolstering hopes of increased liquidity to offset the COVID-19 pandemic’s economic impact.

The Federal Reserve is also expected to keep lending rates at near-zero and signal their staying there for the foreseeable future at the conclusion of their meeting later in the day. Markets are anticipating an update on the Fed’s bond-buying program.

The mix of low interest rates and increased liquidity has brightened the outlook for equities, with markets having moved in tandem with any progress toward fresh stimulus in recent weeks.

“They might not have reached a deal yet, but are definitely headed in the right direction and some sort of a deal will soon be announced,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“The market is going to be looking at the (Fed’s) bond-buying program. So while we get an overall dovish communiqué, the key focus will be if the Fed is going to indicate any pullback in using its tools.”

U.S. S&P 500 E-minis were up 9 points, or 0.24pc, at 08:04 a.m. ET. Dow E-minis were up 67 points, or 0.21pc, while Nasdaq 100 E-minis were up 17 points, or 0.14pc.

Technology shares pushed Wall Street higher on Tuesday, with the Nasdaq ending at a record high, with investors viewing the sector as more resilient to the pandemic.

Airline stocks retreated in premarket trade after Southwest Airlines Co flagged a higher cash burn in the fourth quarter, as well as increased trip cancellations in December. Southwest’s shares fell 0.8pc.

Data showed U.S. retail sales fell 1.1pc in November, declining for a second straight month, likely weighed down by raging new COVID-19 infections and decreasing household income.

Twitter Inc rose 3.4pc after J.P. Morgan upgraded its stock to “overweight”, as the brokerage expects the social media company to stage a significant rebound in online advertising following a pandemic-fueled decline.

Shares of marijuana producers Aphria Inc and rival Tilray Inc jumped 6pc and 29pc, respectively, after the two companies agreed to combine their operations and create the largest cannabis producer by sales.