Saturday, 18th May, 2024
Saturday, 18th May, 2024

Stocks cheer US stimulus progress; dollar falls on dovish Fed

Wall Street stocks finished mostly higher Wednesday while the dollar fell as markets cheered progress on US stimulus talks and a dovish Federal Reserve announcement.

Congressional leaders said they were nearing a long-awaited agreement on a stimulus package for the pandemic-hit US economy, with top Senate Democrat Chuck Schumer describing the parties as “very close” to a deal.

That helped lift the Nasdaq to a second straight record, although the Dow finished modestly lower.

Earlier, European equities pushed higher as British and EU negotiators moved closer to a deal on a post-Brexit trade, although those talks also had not reached the finish line.

Progress on Capitol Hill on the stimulus package helped offset disappointment over a November US retail sales report, which fell by a bigger-than-expected 1.1 percent compared to October in a sign of the drag from higher coronavirus cases.

Investors also took heart from a slightly upgraded Fed forecast for US growth in 2021 and 2022 as the central bank maintained ultra-low interest rates.

“The case for fiscal policy right now is very strong. I think that is widely understood,” Fed Chair Jerome Powell told reporters following the central bank’s two-day policy meeting, noting that expanded jobless benefits and eviction moratoriums are set to expire before the end of the year.

Sam Stovall, chief investment strategist at CFRA Research, said the US equity market “appears to be traveling on end-of-year auto-pilot, which should allow share prices to drift higher, unless they hit an unanticipated pothole.”

The dollar, meanwhile, pulled back against the euro and other currencies as the Fed still signaled it expects low rates through 2023, said Joe Manimbo, senior market analyst at Western Union Business Solutions.

“The dovish message from the Fed and its willingness to lend more support to a recovery that’s moderating will leave the greenback vulnerable to further declines,” Manimbo said in a note.

Elsewhere, bitcoin, the leading virtual currency, pushed to new records above $21,000 to trace an astounding leap in one year as financial markets maintain their appetite for riskier assets.

Just 12 years old, bitcoin has pursued a meteoric rise since March, when it stood at $5,000, spurred by online payments giant PayPal saying it would enable account holders to use cryptocurrency.

Among individual companies, Pfizer fell 2.3 percent following a report that a health worker in Alaska suffered a serious allergic reaction after getting Pfizer-BioNTech’s Covid-19 vaccine and is now hospitalized but stable.

A Pfizer spokesperson said it was working with health authorities and monitoring the situation.

US regulators issued an emergency approval with the warning that people who had known allergies to ingredients inside the vaccine should avoid it.

:: Share ::