The Dow Jones Industrial Average slipped even though Senate Majority Leader Mitch McConnell touted “significant progress” on reaching a coronavirus stimulus agreement. Meanwhile, the holiday shopping season is faring poorly as retail sales fell and Covid-19 cases passed a new milestone. The Federal Reserve is also getting set to announce the results of its latest meeting.
Coronavirus Stimulus Expected
There are rising hopes Congress could announce a new $900 billion coronavirus relief bill as soon as Wednesday. Urgency is reaching new heights because the government will shut down Saturday if a deal is not struck, while 12 million Americans will lose unemployment benefits the day after Christmas.
“We’re making significant progress, and I’m optimistic that we’re gonna be able to complete an understanding sometime soon,” McConnell told reporters. He spoke after a negotiating session that included House Speaker Nancy Pelosi and leading Senate Democrat Chuck Schumer. The Trump administration was represented by Treasury Secretary Steven Mnuchin, who joined the meeting by conference call.
U.S. retail sales dropped a seasonally adjusted 1.1% in November from the prior month, the Commerce Department said Wednesday. This coincides with a spike in Covid-19 cases. However, sales were up by 4.1% when compared with the same month last year. The gauge measures purchases at stores, restaurants and online. October sales were also revised down slightly.
The coronavirus pandemic passed a milestone, with the cumulative number of confirmed Covid-19 cases in the U.S. passing the 17 million mark Wednesday, according to the Worldometer data tracker. The total virus-related deaths in the U.S. passed the 310,000 mark.
Nasdaq, S&P 500 Rally
The Nasdaq was the leading major index, though its gain of almost 0.3% was modest. Top performers included Workday (WDAY), which rose more than 4%, as well as BioMarin Pharmaceutical (BMRN) and payments stock PayPal (PYPL), with both up more than 3%.
U.S. Stock Market Today Overview
Last Update: 1:16 PM ET 12/16/2020
Volume was mixed compared to Tuesday. Trading was down more than 10% on the NYSE and rose by around 1.5% on the Nasdaq.
Small caps were struggling, and were forced lower again after an early rally attempt. The Russell 2000 small-cap index was down 0.4%.
It was also a mixed day for the sectors, with losers than winners. Consumer discretionary and technology were leading.
Growth stocks were standing out, with the IBD 50 ETF (FFTY) rising just over 0.3%. The best performers in the IBD 50 index included Dynatrace (DT), which gained almost 7%, and ServiceNow (NOW), which rose almost 4%.
Microsoft Stock Leads Dow Jones
The Dow Jones Industrial Average was forced lower in a choppy session so far. It was continuing to fade, slipping 0.3%.
Microsoft was the standout performer, rising by more than 2%. The move saw it pull clear of its 50-day moving average, an encouraging sign.
It was clear of its nearest challengers Salesforce.com (CRM), whch rose almost 1.5% and Intel (INTC), which was up 0.6%. Losers outnumbered winners, with Honeywell International (HON) and Walgreens Boots Alliance (WBA) faring worst of all with losses of more than 2%.
Fed Meeting Outcome Unclear
With the Federal Reserve set announce the results of its latest meeting, the odds of an immediate adjustment in policy look pretty good. But Wall Street is unsure what the outcome will be.
Deutsche Bank’s chief U.S. economist Matthew Luzzetti expects words, not actions, with the Fed maintaining its asset-purchase status quo. “The most important innovation for this meeting is likely to be an enhancement to their QE guidance,” he wrote.
UniCredit chief international economist Daniel Vernazza expects “the Fed will buy longer-dated bonds in order to flatten the curve and provide more accommodation.”
Vernazza sees the Fed meeting outcome as “a close call.” Yet he expects that a stalling job market and a tamer fiscal spending outlook amid divisions in Congress will push the Fed to act.
The Fed’s asset purchases currently amount to about $120 billion per month. That includes $80 billion in Treasurys and $40 billion in government-backed mortgage securities.
Nio Stock Rises, Tesla Stock Slips
Electric vehicle stocks were enduring a mixed session Wednesday. Chinese player Nio pulled further away from its 50-day moving average as it gained more than 2%. However this was a more marginal gain than in the previous session. It remains well shy of its Nov. 24 high of 57.20.
Nio fell Monday after it raised about $2.65 billion in an upsized share offering. It sold 68 million American depositary receipts (ADS) at 39 per share.
IBD Leaderboard stock Tesla continued to fall, though it was off lows, falling almost 2%. It remains extended from a 466 buy point after breaking out of a cup-with-handle base. Tesla still has a best-possible IBD Composite Rating of 99. Tesla stock is up more than 630% so far in 2020.
Synopys Stock Among Breakouts
Computer peripherals maker Logitech (LOGI) passed a cup-with-handle buy point of 90.46. Logitech stock has a perfect IBD Composite Rating of 99. The stock boasts a heady mix of strong chart and earnings performance. It has a best-possible EPS Rating of 99.
The Switzerland-based company makes products that are used in areas including gaming, video and computing. Customers include consumer electronics distributors and retailers. Also, mass specialty electronics stores and computer and telecommunications stores.
Leaderboard stock Shopify (SHOP) also moved into buy zone after staging a breakout from a cup with handle base. The ideal buy point is 1,112.51. The move came in heavy volume, which is a positive sign. Shopify stock has a Composite Rating of 97, with both earnings and price performance strong points.