Wall Street flat as virus woes offset stimulus hopes

REUTERS: Wall Street moved within a tight range on Wednesday as signs of the economic impact of the COVID-19 pandemic offset optimism over a stimulus package, with investors keeping an eye on the last Federal Reserve meeting for the year.

Airline stocks retreated 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 0.9per cent.

Data showed U.S. retail sales fell 1.1per cent in November, declining for a second straight month, as new coronavirus infections and decreasing household income weighed on spending.

U.S. congressional leaders reported substantial progress toward a spending bill late on Tuesday, while a string of media reports suggested a deal to release more money into the economy was imminent.

The Fed 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.

"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."

While a mix of low interest rates and increased liquidity have brightened the outlook for equities, headwinds from the virus have sobered near-term expectations, despite the recent launch of a vaccination program.

At 10:00 a.m. ET, the Dow Jones Industrial Average was down 6.52 points, or 0.02per cent, at 30,192.79, the S&P 500 was up 0.30 points, or 0.01per cent, at 3,694.92. The Nasdaq Composite was up 4.92 points, or 0.04per cent, at 12,599.98.

The Nasdaq fell after touching a record high shortly after the open.

Utilities and real estate were the best performing S&P 500 sectors on Wednesday.

Twitter Inc rose 5.5per cent 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.

Marijuana producers Aphria Inc and rival Tilray Inc gained 1.5per cent and 20.0per cent, respectively, after the two companies agreed to combine their operations and create the largest cannabis producer by sales.

Advancing issues outnumbered decliners for a 1.20-to-1 ratio on the NYSE and a 1.14-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 107 new highs and seven new lows.

(Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)