Dec 16 (Reuters) – Wall Street has traded within a tight range as signs of the economic impact of the COVID-19 pandemic offset optimism over a US stimulus package.

Airline stocks retreated on Wednesday after Southwest Airlines Co flagged a higher cash burn in the fourth quarter, as well as increased trip cancellations in December. Southwest’s shares fell 0.9 per cent.

Data showed US retail sales fell 1.1 per cent in November, declining for a second straight month, as new coronavirus infections and decreasing household income weighed on spending.

Meanwhile investors are keeping an eye on the last Federal Reserve meeting for the year.

US congressional leaders reported substantial progress toward a spending bill late on Tuesday, while a string of media reports suggested a deal to release more money into the economy was imminent.

The Fed is also expected to keep lending rates at near-zero and signal their staying there for the foreseeable future at the conclusion of their meeting later in the day. Markets are anticipating an update on the Fed’s bond-buying program.

“They might not have reached a deal yet, but are definitely headed in the right direction and some sort of a deal will soon be announced,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

While a mix of low interest rates and increased liquidity have brightened the outlook for equities, headwinds from the virus have sobered near-term expectations, despite the recent launch of a vaccination program.

In early trading, the Dow Jones Industrial Average was down 6.52 points, or 0.02 per cent, at 30,192.79, the S&P 500 was up 0.30 points, or 0.01 per cent, at 3,694.92. The Nasdaq Composite was up 4.92 points, or 0.04 per cent, at 12,599.98.

The Nasdaq fell after touching a record high shortly after the open.

Utilities and real estate were the best performing S&P 500 sectors on Wednesday.

Twitter Inc rose 5.5 per cent after J.P. Morgan upgraded its stock to “overweight”, as the brokerage expects the social media company to stage a significant rebound in online advertising following a pandemic-fuelled decline.

Marijuana producers Aphria Inc and rival Tilray Inc gained 1.5 per cent and 20 per cent respectively, after the two companies agreed to combine their operations and create the largest cannabis producer by sales.

Advancing issues outnumbered decliners for a 1.20-to-1 ratio on the NYSE and a 1.14-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and no new low, while the Nasdaq recorded 107 new highs and seven new lows.