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
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
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
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
Still, the lack of a breakthrough in talks over a new round of
economic relief in Washington was keeping some investors on
"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)
Copyright (c) 2020 Dow Jones & Company, Inc.