By Joe Wallace 

U.S. stock futures wavered Friday as investors awaited data showing the strength of consumer spending and braced for high-level trade talks between U.S. and Chinese officials over the weekend.

Futures tied to the S&P 500 were edged down 0.1%, suggesting the benchmark index could come under pressure after the opening bell. The S&P 500 and Dow Jones Industrial Average are both on track for muted weekly gains.

"The market has been quite stoical this week," said Jane Foley, head of foreign-exchange strategy at Rabobank. "It's August, so we may have to wait until September to find any strong direction."

The stalemate in Washington over a fresh round of economic stimulus, new travel restrictions in Europe and a fall in Chinese retail sales are weighing on sentiment, Ms. Foley said.

Investors will parse data on U.S. retail sales to assess the health of consumer spending, a key driver of the economy. The figures, due at 8:30 a.m. ET, are likely to show sales grew in July, though not as rapidly as in May or June. They could confirm other data suggesting growth cooled last month as rising Covid-19 cases deterred shoppers from visiting stores, bars and restaurants.

Money managers are also awaiting trade talks between senior U.S. and Chinese officials, scheduled for Saturday. Relations have deteriorated in recent months, concerning investors who think fresh barriers to trade would further hurt the global economy.

The main thrust of the discussion is aimed at evaluating China's compliance with a bilateral trade agreement signed in January. Chinese Vice Premier Liu He, President Xi Jinping's chief trade negotiator with Washington, is expected to bring up concerns over the executive orders against the WeChat and TikTok apps.

"The tone of these talks will be crucial," Ms. Foley said. "There is a concern that China has perhaps not fulfilled its promises in, for example, importing agricultural or energy goods from the U.S."

In overseas markets, travel-and-leisure companies led European shares lower, pushing the Stoxx Europe 600 down 1.3%. The U.K. government late Thursday imposed a quarantine on people traveling from France, the latest in a series of restrictions designed to stem rising coronavirus cases in the region. on the continent.

New coronavirus cases in the U.S. climbed above 50,000 for the second day in a row Thursday, according to Johns Hopkins University. The seven-day average of new infections topped the 14-day average in 13 states and Washington, D.C., according to a Wall Street Journal analysis, suggesting cases were rising in those areas.

Shares in sectors that are sensitive to economic growth, such as industrials and energy companies, have advanced this week while highflying technology stocks have cooled.

"The underlying tone of the market has improved markedly over the past few weeks," said Candice Bangsund, a portfolio manager at Fiera Capital. "There are some encouraging signs of a global economic recovery."

Still, the lack of a breakthrough in talks over a new round of economic relief in Washington was keeping some investors on edge.

"There's a slightly nagging feeling that there should be a deal by now, or there should be more positive noises," said Emiel van den Heiligenberg, head of allocation for multiasset funds at Legal & General Investment Management. "If they walk away from the talks, then you get a fiscal cliff in the U.S., which equity investors won't take very lightly." Stocks could drop 10% in that scenario, according to Mr. van den Heiligenberg, who thinks a deal will be reached.

The Shanghai Composite Index rose 1.2% by the close of trading after data showing China's recovery continued in July, though the economy shed some momentum as Beijing eased off stimulus measures. Industrial production rose 4.8% from a year before but retail sales, a closely watched gauge of consumption, fell 1.1%.

The yield on 10-year Treasury notes slipped to 0.704%, from 0.714% Thursday. Yields had risen for five straight trading days, boosted by hefty government debt auctions including a $26 billion-sale of 30-year bonds that met weak demand.

Gold futures fell 0.8% to $1,955.20 a troy ounce, putting prices on course to decline 3.6% for the week. The precious metal, whose price hit a record high earlier this month, has come under pressure from rising bond yields.

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

(END) Dow Jones Newswires

August 14, 2020 08:25 ET (12:25 GMT)

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