By Anna Hirtenstein 

U.S. stock futures ticked up ahead of House Speaker Nancy Pelosi's Tuesday deadline for Congress to reach an agreement on a spending package to support American households and businesses through the pandemic.

Securities tied to the S&P 500 rose 0.5%, indicating that U.S. stocks may gain after the opening bell. The broad-market index fell 1.6% Monday as investors grew concerned that lawmakers weren't making progress on a deal.

Mrs. Pelosi has indicated that the White House needs to reach a deal with Democrats by the end of Tuesday if the government wants to pass the next coronavirus-relief bill before Election Day. The California Democrat and Treasury Secretary Steven Mnuchin edged closer on some policy differences holding up a sweeping coronavirus relief package, but disputes remained. Both sides said they are continuing to work on the matter.

"There has to be some form of a deal: the most likely outcome is that they'll have to do something. Given what's happening with Covid, the economy needs some support and markets need some form of guidance," said Peter Dixon, an economist at Commerzbank. But "we are really running out of time," he cautioned.

Markets have swung in recent weeks on every twist in the talks. If passed, the stimulus package could drive a further rally in stocks.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 0.773%, from 0.760% on Monday.

Investors are also continuing to assess the elevated number of new coronavirus infections in the U.S. and Europe in recent weeks. Restrictions in some countries including the U.K. and France have been tightened, though most governments have avoided halting business activity completely, shielding the economy from the worst of the fallout.

"On the virus front, headlines are getting worse, but our base case is still that there won't be another full lockdown," said Fahad Kamal, chief investment officer at Kleinwort Hambros. "There's still a big difference between localized, targeted lockdowns and the shutdowns we had in March and April."

Overseas, the pan-continental Stoxx Europe 600 edged up 0.1%.

China's Shanghai Composite Index advanced 0.5% by the close of trading, while Japan's Nikkei 225 retreated 0.4%.

Fresh data on the U.S. housing market will be released at 8:30 a.m. ET, with the latest figures on permits for new construction and a tally of new homes built in September. It will be closely scrutinized by investors for an indication into the health of the bedrock industry, employment and consumer spending. Economists are expecting signs of moderate growth.

Corporate earnings may also weigh on market sentiment through the trading session: consumer retail company Procter & Gamble and defense giant Lockheed Martin are scheduled to report quarterly results starting at about 7 a.m. Technology firms Netflix and Snap, the developer of the Snapchat app, are expected to release earnings after the market closes.

Netflix in particular will be closely watched for indications of the extent to which tech companies are continuing to benefit from people spending more time at home during the pandemic, according to Mr. Kamal. The stock has been among the best performers this year, and has climbed over 60% so far.

Strong results from Netflix will "be the latest bit of validation on whether the enormous valuations that we're paying, do they make sense?" Mr. Kamal said. "It will be reflective of the stay-at-home trade in the wider sense, the trade that's been by far the winner over the course of this year."

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

 

(END) Dow Jones Newswires

October 20, 2020 05:50 ET (09:50 GMT)

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