U.S. Stock Futures Slip at End of Big Week

By Anna Isaac and Gunjan Banerji

U.S. stock futures slipped Friday as the latest employment report showed the economy added more jobs than expected last month, though the pace of the recovery stalled.

Employers added 1.8 million jobs in July and the unemployment rate fell to 10.2%, according to the Labor Department. Economists surveyed by The Wall Street Journal had projected that payrolls grew by 1.5 million and that the unemployment rate dropped to 10.6% from 11.1% in June.

Futures tied to the S&P 500 were down 0.4%. Stock futures initially pared their declines after the jobs report, only to reverse course shortly after. The S&P 500 is on track to close the week up about 2%.

"It shows we're going in the right direction but we're still nowhere close to where we were in February," said Shawn Cruz, senior markets strategist at TD Ameritrade, of the jobs report.

July's job growth followed May and June's combined payroll gain of 7.5 million as many states lifted lockdown restrictions on businesses. There are now about 13 million fewer jobs than in February, the month before the coronavirus hit the U.S. economy.

The latest jobs figure comes after new data released Thursday showed that filings for jobless benefits fell last week to their lowest level since the coronavirus hit the U.S. in March, a sign layoffs had abated. Still, they remained at historically high levels for the 20th straight week.

Also hanging in the backdrop are tensions between the U.S. and China. President Trump signed executive orders Thursday night that would bar people in the U.S. or subject to U.S. jurisdiction from transactions with the China-based owners of WeChat and TikTok, effective 45 days from Thursday. That essentially imposes a 45-day deadline for an American company to purchase TikTok's U.S. operations. The orders are likely to be viewed in China as an attempt to stifle the nation's technology sector.

The orders come as relations deteriorate between the two countries, prompting speculation that trade among the world's two largest economies could take a hit.

"China is just about the only bipartisan issue in Washington at the moment," said James Athey, senior investment manager at Aberdeen Standard Investments. "The framework of a Cold War, decoupling and a bi-polar world is the right one to think about. It won't be possible to straddle both China's and the U.S.'s agenda."

Shares of Tencent Holdings plunged as much as 10% on Friday in Hong Kong, hours after Mr. Trump signed the order targeting its WeChat app. Analysts who follow Tencent were scrambling to figure out how much of the company's business could be affected.

In another sign of the deepening rift, Chinese companies with shares traded on U.S. stock exchanges would be forced to give up their listings unless they comply with U.S. audit requirements under a plan recommended Thursday by the Trump administration.

Overseas, the pan-continental Stoxx Europe 600 wavered between small gains and losses. In Asia, major markets fell. The Shanghai Composite dropped almost 1%, while Hong Kong's Hang Seng Index fell nearly 1.6% and Japan's Nikkei 225 index dropped 0.4%.

Concerns over delays to the next tranche of fiscal stimulus in the U.S. are also weighing on markets, investors said. Talks between White House officials and Democratic leaders on a new coronavirus-aid package ended late Thursday without a breakthrough as both sides edged closer to the Trump administration's Friday deadline for reaching a deal or leaving the bargaining table.

Shares of Uber Technologies fell 4% in off-hours trading. The company posted another big loss after market close Thursday, with little sign of recovery in its core ride-hailing business as the pandemic drags on.

Overseas, the Turkish lira rose 0.7% against the dollar after hitting its weakest ever closing level Thursday. Officials from the central bank and the Turkish banking watchdog held an hourslong meeting with top executives from the country's main banks late Thursday evening to discuss recent market developments.

"The situation in Turkey is getting worse and may feed negative spillovers," Mr. Hardman said. "There's potential there that could push the dollar higher against the euro. The euro's more exposed to a negative shock in Turkey, as we saw in 2018."

The yield on the benchmark 10-year U.S. Treasury ticked up to 0.541%, from 0.535% Thursday.

Write to Anna Isaac at [e-mail] and Gunjan Banerji at [e-mail]