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The news affecting the stock market this week will be the Fed meeting economic forecasts for GDP and unemployment are expected, as well as the release of the government report on US retail sales in November a key driver of the US economy.

Major US stock indices closed lower last week as the Labor Department released a jump in new jobless claims amid tightening quarantine measures amid rising COVID-19 cases. In addition, Congress failed to reach an agreement on a new pandemic stimulus package, but negotiations continued.

The Dow Jones, S&P500 and Nasdaq Composite indices were down 0.57%, 0.96% and 0.69%.

Many Fed officials have been calling for a new package of measures from the government over the past few months, pointing out that the central bank's monetary policy efforts work best in tandem with strong fiscal stimulus from congressional lawmakers.

The government is being asked to increase unemployment benefits, financial support and aid to states and local governments.

Chief economist of Deutsche Bank Matthew Luzzetti believes that the Fed will continue its cautious approach in statements and forecasts as despite positive news on vaccines, officials continue to act in the face of high short-term uncertainty due to COVID-19. The Fed's latest statements said that to support financial markets, the central bank will continue to buy Treasury securities and mortgage-backed securities, but will act on the latest economic data. The Fed's quantitative easing programme currently calls for $80bn worth of Treasuries and $40bn worth of mortgage-backed securities to be purchased each month.

According to the Fed's latest statements, benchmark interest rates will remain at 0.25%-0% until at least 2023, with a forecast of a 3.7% decline in gross domestic product (GDP) in 2020.

US retail sales report for November

On Wednesday the US Department of Commerce is scheduled to release its retail sales report for November which will show how Americans shopped, on the one hand, amid the biggest Black Friday and Cyber Monday sales and, on the other hand, a rise in COVID-19 cases and high unemployment.