Wall Street rose on Wednesday, with the Nasdaq closing at record highs as investors awaited a potential 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 the recession, even as policymakers' outlook for next year improved following initial rollout of a coronavirus 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, partner at Cherry Lane Investments in New Vernon, 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% in 2020.

U.S. congressional negotiators were "closing in on" a $900 billion COVID-19 aid bill that will include $600 to $700 stimulus checks and extended unemployment benefits, and Congress could start voting within 24 hours, lawmakers and aides said.

With the market's focus on aid to consumers and business to combat the economic fallout from the virus, the "news of the day" was a possible deal in Washington, said William Northey, senior investment director at U.S. Bank Wealth Management in Minneapolis.

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

Data showed U.S. retail sales fell 1.1% 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.

The Nasdaq Composite closed at a record high, adding 63.13 points, or 0.5%, to 12,658.19. The S&P 500 gained 6.55 points, or 0.18%, to 3,701.17. The Dow Jones Industrial Average fell 44.77 points, or 0.15%, to 30,154.54.

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 the two companies agreed to combine their operations and create the largest cannabis producer by sales.

GLOBAL MARKETS

Global stocks hit record highs on Wednesday as growing hopes of deals on U.S. fiscal stimulus and Brexit and the Federal Reserve's pledge to keep its benchmark interest rate near zero offset concerns over the economic impact of COVID-19.

The U.S. central bank promised to keep funneling cash into financial markets further into the future to fight the recession.

"It's a positive statement," said Quincy Krosby, chief market strategist at Prudential Financial. "They've married a positive projection for next year with the intention to keep an accommodative and ultra-dovish stance until they are certain the economic recovery has taken hold."

U.S. stocks gained after the Fed's statement.

"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, partner at Cherry Lane Investments in New Jersey.

The dollar also recovered some losses, having earlier fallen to its lowest level since April 2018. The dollar index, which tracks the greenback versus a basket of six currencies, fell 0.213 point, or 0.24 percent, to 90.26.

Weaker-than-expected retail sales data in the United States, however, added to growing signs of a slowdown in that economy's recovery from the pandemic recession, shining light on the need for a deal on coronavirus relief.

U.S. congressional negotiators were "closing in on" a $900 billion COVID-19 aid bill that will include a new round of stimulus checks and extended unemployment benefits, lawmakers and congressional aides said.

"Everyone knows that something needs to be done before the holiday," said Edward Moya, senior market analyst at OANDA in New York. "The weaker retail sales report gave a strong indication that sentiment among U.S. consumers is waning."

The MSCI world stock index hit a record high, up 0.6% on the day. The index has climbed 15% since the beginning of November, propelled by trillions of dollars worth of global stimulus.

In Europe, markets were cheered by the possibility of a Brexit trade deal, better-than-expected euro zone PMI economic data and a European Central Bank decision to let euro zone banks start paying dividends again if they have enough capital.

European stocks rose 0.8% with the UK's FTSE 100 index jumping 0.9%.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 6.88 points, or 1.07%, to 647.19.

SHOT IN THE ARM

Progress on rolling out vaccines continued, after Moderna Inc's COVID-19 vaccine appeared set for regulatory authorization this week.

The United States also expanded its rollout of the newly approved vaccine developed by Pfizer Inc and BioNTech SE .

Positive soundings from the European Union on Brexit talks helped lift the British pound on Wednesday above $1.35 and to its highest level against the dollar since May 2018.

Britain and the European Union have moved closer to sealing a new trade deal, but it was still unclear if they would succeed, the bloc's chief executive said.

The euro rose above $1.22 for the first time since April 2018, and German government bond yields, which tend to rise on positive news on the economic outlook, hit a one-week high after data showed better-than-expected business activity in the bloc this month.

A long-overdue U.S. Treasury report on the foreign exchange practices of U.S. trading partners labeled several countries, including Switzerland and Vietnam as currency manipulators and added others to a watchlist.

The news helped Bitcoin smash through $20,000 for the first time.

Spot gold prices rose $9.731, or 0.53%, to $1,863.19 an ounce. U.S. gold futures settled up 0.2% at $1,859.10.

Brent crude settled up $0.32, or 0.63%, at $51.08 a barrel. U.S. crude settled up $0.20, or 0.42%, at $47.82 per barrel.