By Michael Wursthorn and Joe Wallace
U.S. stocks struggled to find direction Friday, but the S&P
500 still managed to notch meager gains for the week while hovering
just below its February record.
The broad index fell less than 0.1% as of the 4 p.m. ET close of
trading, the latest in a series of modest moves that have left
major indexes little changed from where they were a week
earlier.
The S&P 500 attempted several runs this week at a new high,
which would have marked its fastest-ever recovery from a bear
market and erased the losses suffered during the coronavirus
pandemic. But the index repeatedly fell short, leaving it up just
0.6% from last Friday.
The market's trepidation reflects the uncertainty facing
investors and the country as coronavirus cases and deaths continue
to rise, analysts said. The main sticking point that dogged markets
lately is the continuing haggling between lawmakers over additional
aid to help the unemployed that has failed to gain traction.
Fresh economic data, including unemployment claims and retail
spending, continue to suggest the economy is recovering, albeit
slowly. Whether the recovery can persist in the absence of further
stimulus is something investors are weighing now, analysts
added.
Despite those concerns, stocks are trading near their highest
levels ever, stretching valuations to a point that haven't been
seen since the dot-com bubble. Tech stocks, which have driven much
of the stock market's recovery, are even pricier and have traded
sideways all week.
"There's a lot of confusion out there," said Larry Swedroe,
chief research officer at Buckingham Wealth Partners, of his
conversations with investors in recent weeks. "They ask how could
stock prices be so high when we're going through this terrible
crisis."
Not helping matters is the looming November election, which is
less than three months away. Former Vice President Joe Biden named
his running mate, Sen. Kamala Harris, on Tuesday, clarifying the
Democratic presidential ticket. Several investors said they expect
to see some election-induced volatility as November nears,
particularly if Democrats appear likely to fare well. That would
raise the likelihood of higher corporate taxes and regulation in
2021.
"The risk of a Biden win could have big, negative implications
for the market," said Mr. Swedroe, although he added trade tensions
between the U.S. and China would likely improve in that
scenario.
On Friday, the Dow Jones Industrial Average rose 34 points, or
0.1%, to 27931.02. The Nasdaq Composite remained in the red, down
0.2%, as Apple, Facebook and Amazon.com all notched small
losses.
Industrial and energy stocks scored the biggest gains of the
day, rising 0.4% and 0.9%, respectively. But without the
participation of tech stocks, which make up a significant chunk of
the market's influence, the S&P gained little traction
throughout Friday's session.
"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."
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."
Several retailers are also expected to report quarterly earnings
next week, giving investors additional windows into consumer
activity. Walmart, Home Depot and Kohl's are due to disclose
results on Tuesday, while TJX and L Brands follow later in the
week.
In overseas markets, travel-and-leisure companies led European
shares lower, pushing the Stoxx Europe 600 down 1.2%. 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.
The Shanghai Composite Index rose 1.2% after data showing
China's recovery continued in July, though the economy shed some
momentum as Beijing eased off stimulus measures.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and Joe
Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
August 14, 2020 16:20 ET (20:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.