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Wall Street has surged, the Nasdaq closing at record highs as investors await a fiscal economic stimulus package and after the Federal Reserve repeated a pledge to keep its benchmark interest rate near zero.

Stocks traded in positive territory after the Fed promised to keep funneling cash into financial markets to fight recession on Wednesday, even as the outlook for next year improves with initial rollout of a COVID-19 vaccine.

“To the extent that we are seeing a slight rise post the meeting, it likely reflects continued confidence on the part of investors who believe low rates for an extended period provides support to stock prices even at these elevated levels,” said Rick Meckler at Cherry Lane Investments in New Jersey.

Gains in tech stocks, many of which have benefited from changes in consumer habits because of the pandemic, pushed the Nasdaq to a record high. Microsoft surged.

Investor sentiment has oscillated in recent sessions between optimism about the early distribution of a COVID-19 vaccine and worries about record infection rates in the United States.

Despite the pandemic, the S&P 500 has climbed over 14 per cent in 2020.

US congressional negotiators were “closing in on” a $US900 billion ($A1.2 trillion) COVID-19 aid bill that will include $US600 to $US700 stimulus checks and extended unemployment benefits.

With the focus is on aid to consumers and business to combat the fallout from the virus, the “news of the day” was a possible deal in Washington, said William Northey at US Bank Wealth Management in Minneapolis.

“That appears to be coming closer to a reality,” he said.

Data showed US retail sales fell 1.1 per cent last month from October, as new coronavirus infections and decreasing household income weighed on spending.

The S&P 500 airlines index dropped after JPMorgan issued multiple downgrades in the sector, citing valuations.

Southwest Airlines Co fell after flagging a higher cash burn in the fourth quarter, as well as increased trip cancellations in December.

Alphabet edged down after Texas Attorney General Ken Paxton said he will file a multi-state lawsuit against the parent company of Google.

Unofficially, the Dow Jones Industrial Average fell 0.15 per cent to end at 30,154.93 points, while the S&P 500 gained 0.18 per cent to 3,701.26.

The Nasdaq Composite climbed 0.5 per cent to 12,658.19.

Twitter Inc rose after JPMorgan upgraded the stock to “overweight”, saying it 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 both gained after they agreed to combine operations and create the largest cannabis producer by sales.