US STOCKS-Dow falls as virus woes offset stimulus bets

(For a live blog on the U.S. stock market, click LIVE/ or
type LIVE/ in a news window)
* Twitter gains on J.P. Morgan upgrade
* Airline stocks fall after J.P. Morgan issues downgrades
* Dow off 0.15%, S&P 500 up 0.18%, Nasdaq up 0.39%

(Adds comment, updates prices)
By Ambar Warrick and Shreyashi Sanyal
Dec 16 (Reuters) - The Dow fell on Wednesday as worries
about the economic impact of the COVID-19 pandemic offset
optimism over a stimulus package, with investors awaiting the
Federal Reserve's outlook on the U.S. economy later in the day.
Flows into heavyweight technology stocks supported the S&P
500 and pushed the Nasdaq to a record high, as the sector's
resilience through the virus outbreak spurred continued buying.
The S&P 500 airlines index .SPLRCALI fell 1.8% after J.P.
Morgan issued multiple downgrades in the sector, citing
valuations. Southwest Airlines Co LUV.N fell 1.7% after flagging a
higher cash burn in the fourth quarter, as well as increased
trip cancellations in December. Data showed U.S. retail sales fell 1.1% last month from
October, as new coronavirus infections and decreasing household
income weighed on spending. U.S. 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. "What we really have is a definitive tug of war between the
virus news and the vaccine news, and the tiebreaker for that has
really fallen on the shoulders of Congress to get more stimulus
out," said Art Hogan, chief market strategist at National
Securities in New York.
The Fed is 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. Also in focus is
an update on the central bank's bond-buying program.
"The market is going to be looking at the (Fed's)
bond-buying program. So while we get an overall dovish
communiqué, the key focus will be if the Fed is going to
indicate any pullback in using its tools," said Peter Cardillo,
chief market economist at Spartan Capital Securities in New
York.
While a mix of low interest rates and increased liquidity
has brightened the outlook for equities, COVID-19 headwinds have
sobered near-term expectations, despite the recent launch of a
vaccination program.
At 12:12 p.m. ET, the Dow Jones Industrial Average .DJI
was down 46.79 points, or 0.15%, at 30,152.52, the S&P 500
.SPX was up 6.61 points, or 0.18%, at 3,701.23. The Nasdaq
Composite .IXIC was up 49.22 points, or 0.39%, at 12,644.28.
Twitter Inc TWTR.N rose 3.2% after J.P. Morgan upgraded
the stock to "overweight". The brokerage expects the social
media company to stage a significant rebound in online
advertising following a pandemic-fueled decline. Marijuana producers Aphria Inc APHA.TO APHA.O and rival
Tilray Inc TLRY.O gained 1.5% and 21.6%, respectively, after
the two companies agreed to combine their operations and create
the largest cannabis producer by sales. Declining issues outnumbered advancers for a 1.14-to-1 ratio
on the NYSE and a 1.04-to-1 ratio on the Nasdaq.
The S&P recorded 29 new 52-week highs and no new low, while
the Nasdaq recorded 149 new highs and 13 new lows.