US stocks edge lower as jarring drop in retail sales offsets stimulus progress

• US equities dipped slightly on Wednesday as investors weighed progress on a stimulus compromise against disappointing economic data.
• Congressional leaders are close to agreeing on a stimulus package that includes just under $900 billion in relief funds, Politico reported. A deal could be finalized as early as Wednesday morning.
• Spending at US retailers contracted by 1.1% in November, the Census Bureau said Wednesday. Economists had expected a drop of just 0.3%. October's preliminary 0.3% gain was revised to a 0.1% drop.
• Investors will look to the Federal Reserve on Wednesday afternoon for updates on the central bank's monetary policy strategy. Officials are expected to either update their asset-purchase program or reveal new guidance for its purchases.
• Watch major indexes update live here.

US stocks dipped slightly on Wednesday as worsening economic data counteracted bets on a stimulus breakthrough.

Congressional leaders are close to reaching a deal on a stimulus package with a price tag of nearly $900 billion, Politico reported. It's expected to omit pandemic-related liability protections for businesses and aid for state and local governments, the two most contentious elements under discussion. More-popular measures including a second round of direct payments and small-business relief are set to be included.

A deal could be finalized as early as Wednesday morning, sources briefed on the negotiations told Politico. Lawmakers have until the end of the week to pass new fiscal support and a funding bill before a government shutdown.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Wednesday:

• S&P 500: 3,689.54, down 0.1%
• Dow Jones industrial average: 30,151.40, down 0.2% (48 points)
• Nasdaq composite: 12,578.47, down 0.1%

Read more: BlackRock shares its 12 top recommendations for a 'new investment order' in 2021 - and says the pandemic should prompt investors to completely rethink how they construct portfolios

The leap forward in stimulus talks cushioned the blow from retail-sales data that was worse than expected. Spending at US retailers contracted by 1.1% in November, the Census Bureau said Wednesday. Economists had expected sales to fall by 0.3%.

October's reading was revised to a 0.1% drop from the preliminary reading of 0.3% growth.

The report snapped a five-month growth streak for retail sales and signaled that strong e-commerce spending on Black Friday wasn't enough to offset weakness throughout the month. US coronavirus cases reached record highs in November, and some states and local governments reinstated lockdown measures to slow the virus' spread. With COVID-19 still raging across the country, the Wednesday reading hints at economic pain heading into the new year.

"These data are materially weaker than expected so you should expect to see downward revisions to fourth-quarter growth. And the risk of an outright contraction in GDP in the first quarter is increasing," said Ian Shepherdson, the chief economist at Pantheon Macroeconomics.

NEWSLETTER

10 THINGS BEFORE THE OPENING BELL

Wake up to the news traders are talking about. Sign up now.

Investors will look to the Federal Reserve later in the day for an update on the central bank's monetary policy plans. The Federal Open Market Committee will conclude its two-day meeting Wednesday afternoon and is expected to announce changes to or new guidance for its asset-purchase program. JPMorgan expects the bank to extend the average maturity of its Treasury purchases to push long-term rates lower and further boost spending.

Aphria and Tilray rallied after the firms announced plans to merge to form the world's largest cannabis company. The combined entity would boast a valuation of roughly $3.9 billion and industry-leading revenue of $685 million over the past 12 months.

Bitcoin surged above $20,000 for the first time, hitting a 24-hour high of $20,410.56. The cryptocurrency nearly breached the resistance level earlier in the month before profit-taking dragged it from all-time highs.

Gold gained 0.7%, to $1,865.82 per ounce.

The US dollar weakened against a basket of Group-of-10 currencies ahead of the Fed's policy announcement. Treasury yields climbed.

Oil prices dipped slightly. West Texas Intermediate crude fell as much as 0.5%, to $47.38 per barrel. Brent crude, oil's international benchmark, slid 0.5%, to $50.49 per barrel, at intraday lows.

Now read more markets coverage from Markets Insider and Business Insider:

Bank of America highlights its top 8 stock picks in the booming housing sector - and explains why the idea that people are fleeing cities because of the pandemic is overblown

US manufacturing output beats November estimates as car factories continue to shine through the pandemic

The upcoming Fed meeting could shed light on when policymakers will unwind key relief measures