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Stock Futures Pull Back After S&P 500 Hits Record

12/02/2020 | 05:46am EST

By Will Horner

U.S. stock futures edged lower Wednesday, suggesting that the major indexes will take a breather after climbing to record highs.

Futures tied to the S&P 500 ticked down 0.1%, a day after the benchmark set its 27th closing record of the year. Contracts linked to the technology-heavy Nasdaq-100 index are almost flat, while Dow Jones Industrial Average futures slid 0.3%.

The market has been fueled higher in recent weeks by optimism that Covid-19 vaccines will help accelerate the economic rebound. That has fueled a rally in stocks that are sensitive to economic growth, including energy and banks.

"We've obviously had a great run up since just before the election results and yesterday we saw that record high, so that is as much a reason as any for some consolidation," said Derek Halpenny, head of research for global markets in the European region at MUFG Bank.

U.S. lawmakers reignited talks this week for coronavirus-relief packages, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin discussing measures by phone for the first time since the election. But investors also remain skeptical about the prospects for fresh stimulus spending in the weeks before President-elect Joe Biden is sworn in.

"Both sides would like to be seen to be doing something with an eye on the run off in Georgia on the fifth of January," Mr. Halpenny said. But Republicans are unlikely to support a large spending package, he added. "I can't see anything happening really until Biden enters the White House."

The Federal Reserve's beige book report, due at 2 p.m. ET, will offer the latest collection of business anecdotes across Fed districts, offering insights into how companies view the economy's prospects.

Investors will also get a view on the health of the U.S. labor market last month from the ADP National Employment Report, due at 8:15 a.m. ET. The data will show how many jobs were added by private employers in the U.S. nonfarm sector.

Federal Reserve Chairman Jerome Powell and Mr. Mnuchin are also set to testify again before a house committee. Lawmakers on Tuesday pressed Mr. Mnuchin over his decision not to renew a suite of emergency Federal Reserve lending programs. The Fed has said it would prefer the lending programs remain in place until the risks posed to the economy by the pandemic has subsided.

In bond markets, the yield on the 10-year Treasurys slid to 0.924%, from 0.933% on Tuesday.

Overseas, the Stoxx Europe 600 edged down 0.2%. Conflicting reports about the status of the talks between the European Union and the U.K. on a post-Brexit trade deal led to choppy trading in the region.

The British pound slid 0.5% against the dollar. A media report that a senior EU diplomat is cautioning both sides run the risk of a no-deal Brexit weighed on sentiment early Tuesday, according to James McCormick, global head of desk strategy at Natwest Markets.

"We are in this moment where negotiations have gone into the tunnel," Mr. McCormick said. "While it is hard to judge where talks are, the early indications are that a no-deal is still a non-negligible risk," he said.

In Asia, the major stock indexes ended trading on a muted note. Japan's Nikkei 225 closed almost flat, while the Shanghai Composite Index and Hong Kong's Hang Seng Index slid roughly 0.1%.

Write to Will Horner at William.Horner@wsj.com

(END) Dow Jones Newswires

12-02-20 0545ET

Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.57% 30996.98 Delayed Quote.1.86%
EURO / BRITISH POUND (EUR/GBP) -0.02% 0.88934 Delayed Quote.-0.82%
HANG SENG -1.66% 29441.63 Real-time Quote.8.12%
NASDAQ 100 -0.29% 13366.396971 Delayed Quote.3.71%
NASDAQ COMP. 0.09% 13543.061633 Delayed Quote.4.99%
NIKKEI 225 -0.44% 28631.45 Real-time Quote.4.33%
S&P 500 -0.30% 3841.47 Delayed Quote.2.27%
S&P/CITIC 300 INDEX 0.00% 4938.31 Delayed Quote.7.51%
S&P/CITIC 50 INDEX 0.00% 4933.29 Delayed Quote.5.77%
STOXX EUROPE 600 -0.57% 408.54 Delayed Quote.2.38%
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