At the close of trade, the Dow Jones Industrial Average index added 337.76 points, or 1.13%, to 30,199.31. The S&P 500 index added 47.13 points, or 1.29%, to 3,694.62. The tech-heavy Nasdaq Composite Index rose 155.02 points, or 1.25%, to 12,595.06.
Stocks closed near record territory as lawmakers neared a coronavirus relief deal and the Federal Reserve indicated most officials expect rates to remain near zero for years.
The Fed announced its widely expected decision to leave interest rates unchanged while also revealing plans to continue its asset purchase program until the economy shows substantial progressed towards the central bank's goals of maximum employment and price stability.
Optimism also was running high over prospects for another fiscal relief package from Congress, after top lawmakers from both parties met face-to-face late Tuesday, though the negotiations showed few clear signs of progress.
ECONOMIC NEWS: US Retail Sales Tumble 1.1% In November- US retail sales tumbled by 1.1 percent in November following a revised 0.1 percent dip in October, the Commerce Department reported on Wednesday. The bigger than expected decrease in retail sales was partly due to a sharp decline in sales by motor vehicle and parts dealers, which plunged by 1.7 percent in November after coming in unchanged in October. Excluding the slump in auto sales, however, retail sales still fell by 0.9 percent in November after edging down by 0.1 percent in October. Ex-auto sales were expected to inch up by 0.1 percent. The Commerce Department said closely watched core retail sales, which exclude automobiles, gasoline, building materials and food services, fell by 0.5 percent in November after edging down by 0.1 percent in October.
US NAHB Homebuilder Confidence Eases In December- The National Association of Home Builders released a report on Wednesday showing confidence pulled back in US home builders by more than expected in the month of December. The report said the NAHB Housing Market Index slid to 86 in December after climbing to 90 in November. Despite the pullback, the NAHB noted the housing market index was still at the second-highest reading in the history of the series. The bigger than expected decrease by the housing market index reflected decreases by all three of the component indices. The index gauging current sales conditions dropped four points to 92, the component measuring sales expectations in the next six months fell four points to 85 and the gauge charting traffic of prospective buyers also decreased four points to 73.
Fed Reiterates That COVID-19 Pandemic Is Causing Tremendous Human And Economic Hardship Across The US- The Federal Reserve on Wednesday said it decided to keep the target range for the federal funds rate at 0 to 1/4 percent, which is where the target range has remained since an emergency rate cut in March. It also plans to continue its asset purchase program until the economy shows substantial progressed towards the central bank's goals of maximum employment and price stability. The accompanying statement reiterated that the Fed plans to keep rates at near-zero levels until labor market conditions have reached levels consistent with maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
The Fed reiterated its assessment that the COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. In addition to announcing its latest monetary policy decision, the central bank also provided updated economic projections. The latest projections show the Fed now expects the economy to shrink by less than expected in 2020 and grow by slightly more than expected in 2021 and 2022. The Fed said it now expects GDP to contract by 2.4 percent in 2020 compared to the 3.7 percent contraction forecast in September. The estimate for the unemployment rate was also lowered to 6.7 percent from 7.6 percent. Looking further ahead, the Fed expects GDP to grow by 4.2 percent in 2021 and by 3.2 percent in 2022, reflecting upward revisions from the previous projections of 4.0 percent and 3.0 percent, respectively.
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