Stock Futures Point to Second Day of Gains

By Joe Wallace

U.S. stock futures ticked higher Wednesday as investors awaited economic data and a second day of congressional testimony by Federal Reserve Chairman Jerome Powell.

Futures tied to the S&P 500 edged up 0.5%, following a rally of over 1% on Tuesday. Contracts tied to the technology-heavy Nasdaq-100 also advanced 0.5%.

Stocks have whipsawed this week: the S&P 500 on Monday briefly neared correction territory -- defined as a retreat of 10% from a recent high -- only to rebound on Tuesday. Investors are contending with the risk of a fresh wave of coronavirus in Europe as well as case levels that remain elevated in the U.S. Signs that authorities are likely to be more restrained in their efforts toward curtailing the spread to avoid dealing further blows to the global economy have cheered some investors.

"Markets are really changing very rapidly their mindset," said Nadège Dufossé, deputy global head of multiasset at Candriam, an asset manager based in Luxembourg. Stocks are unlikely to resume their relentless advance, but also may not lurch downward because of the Fed's continued support to the economy, she said. "At the end of the day, you have a floor for markets and we will not go back, probably, to March lows."

The House passed a short-term spending bill keeping the government funded through Dec. 11, likely averting a partial shutdown when the funding expires next Thursday.

Still, the dimming chances that lawmakers agree on a new round of economic stimulus before November's election are weighing on sentiment, Ms. Dufossé said. The focus in Congress has shifted this week to the efforts to fill the late-Justice Ruth Bader Ginsburg's seat in the Supreme Court, rather than reaching an agreement over a second coronavirus-relief package, investors said.

The new wave of infections has also prompted renewed interest in the so-called stay-at-home trade, where investors bet that some technology and media companies will benefit as people spend more time at home because of coronavirus-restrictions.

Ahead of the opening bell in New York, shares in Tesla fell 5.6% after Chief Executive Elon Musk said it could take three years to fully realize large reductions in battery costs, disappointing some investors. Mr. Musk's target to produce 20 million vehicles a year also came without a precise timeline or budget.

Shares of Nike surged 12% in premarket trading after the sportswear company said sales rebounded over the summer.

Surveys of purchasing managers, due at 9:45 a.m. ET, are expected to show economic activity kept expanding this month, but at a slightly slower pace than in August. Early signs of recovery in retail sales, industrial production, auto sales and payrolls lost momentum over the summer, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a report.

Mr. Powell is due to testify in front of a House committee overseeing the U.S. response to coronavirus, starting at 10 a.m. ET. Mr. Powell and Treasury Secretary Steven Mnuchin on Tuesday told lawmakers that more government spending would be needed to sustain the economic recovery.

Randal Quarles, the Fed's vice chair for supervision, is scheduled to speak about the economic outlook to a banking event at 2 p.m. ET.

U.S. government bonds remained in a narrow range ahead of Mr. Powell's testimony. The yield on 10-year Treasury notes edged up to 0.666% from 0.663% Tuesday. The WSJ Dollar Index gained 0.2%, climbing for a fourth day.

The stronger dollar weighed on commodity prices. U.S. crude-oil futures fell 1% to $39.40 a barrel while gold futures dropped 1.4% to $1,880.30, their lowest level in over a month.

Data from the Energy Department, due at 10:30 a.m. ET, are expected to show that U.S. crude stockpiles shrank by 1.4 million barrels in the week ended Sept. 18.

Overseas markets were mixed. The Stoxx Europe 600 rose 1.3%, while China's Shanghai Composite Index edged up 0.2% and Japan's Nikkei 225 closed slightly lower.

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