BK Bank of New York Mellon Corporation

By Joe Wallace 

U.S. stock futures wobbled Friday ahead of data on retail sales and industrial production, signaling a potentially muted end to a volatile week on Wall Street.

Futures tied to the S&P 500 wavered between gains and losses after the broad stocks gauge fell for a third straight day Thursday. The benchmark is on track to eke out its most tepid one-week advance for this year. Contracts for the technology-heavy Nasdaq-100 edged up 0.2%.

Stocks have been buffeted in recent days by spikes in coronavirus infection levels and uncertainty around the likelihood of a second batch of economic stimulus being delivered before Election Day. Investors say a new round of relief is needed to keep the U.S. economy in recovery mode.

Rising Covid-19 cases point to an autumn surge in infection that may prompt local authorities to renew restrictions, dealing a blow to the halting economic recovery.

"There are some pretty significant concerns that we're going to see a ramp-up in infections in the U.S.," said Ronald Temple, head of U.S. equity at Lazard Asset Management. "I am worried that could be a headwind between now and year-end."

The burst of infection is likely to make consumers more cautious about travel, or going to restaurants, cinemas and stores. Many investors are overly bullish about the chances of a vaccine being developed, Mr. Temple added.

White House and Democratic negotiators agreed Thursday to include a national coronavirus-testing strategy in relief legislation, potentially removing a key Democratic concern with the administration's proposals. President Trump called on Treasury Secretary Steven Mnuchin to accept an aid package approaching $2 trillion. Many Republican lawmakers are wary of approving another bill of that size, but Mr. Trump on Thursday insisted Senate Republicans will back him despite their current misgivings.

"They might get something together, but it's really surprising that it hasn't happened yet," said Jonas Goltermann, senior markets economist at Capital Economics.

Another factor weighing on stocks this week is concern about how quickly drugmakers will be able to come to market with an immunization shot.

"There's been bad news about vaccines," Mr. Goltermann said, pointing to the pause in trials of Johnson & Johnson's Covid-19 shot. "That's arguably even more important than the fiscal stimulus. A vaccine would be a game-changer."

More than half a dozen states reported record numbers of new coronavirus cases Thursday, pushing the U.S.'s single-day total above 60,000 for the first time in over two months. Midwestern states including Ohio, Wisconsin and Michigan were particularly hard hit.

Investors are also awaiting the latest data on U.S. retail sales, due to be published at 8:30 a.m. ET. Sales likely rose for a fifth month in a row in September as consumers prepared for further months of working and studying from home by spending on appliances and vehicles.

Consumer spending may falter over the winter if Washington doesn't deliver a new round of stimulus, according to Mr. Temple. "The longer this persists without that extra unemployment benefit the more likely we are to see evictions, mortgage delinquencies and other kinds of credit defaults," he said. "You're going to see a slow grinding deceleration in consumption activity."

Other data indicate the economy is already losing momentum. New applications for unemployment benefits, a proxy for layoffs, last week rose to the highest level since late August.

Earnings season is rolling on, with State Street, Bank of New York Mellon and oilfield-services company Schlumberger due to file quarterly results before the bell in New York. J.B Hunt Transport Services is set to report earnings after the close of trading.

Traders will also parse data on U.S. industrial production, due from the Federal Reserve at 9:15 a.m. ET, and a preliminary reading at 10 a.m. of the Michigan Consumer Sentiment Index for this month. Economists expect industrial output to have continued its recovery in September, though at a slower pace than earlier in the summer.

Yields on 10-year Treasury notes edged down to 0.724%, from 0.730% Thursday. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, ticked down 0.1%.

In overseas markets, European stocks recouped some recent losses, pushing the Stoxx Europe 600 up 0.7%. Asian markets were mixed by the close of trading, with China's Shanghai Composite Index ticking up 0.1% and Japan's Nikkei 225 losing 0.4%.

U.S. crude-oil futures fell 0.8% to $40.64 a barrel ahead of weekly data on the number of active oil rigs from Baker Hughes.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

October 16, 2020 05:57 ET (09:57 GMT)

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