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Stock Futures Signal Muted End to Choppy Week on Wall Street

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10/16/2020 | 08:34am EDT

By Joe Wallace

U.S. stock futures wobbled Friday ahead of data on retail sales and industrial production, signaling a potentially muted end to a volatile week on Wall Street.

Futures tied to the S&P 500 wavered between gains and losses after the broad stocks gauge fell for a third straight day Thursday. The benchmark is on track to eke out its most tepid one-week advance for this year. Contracts for the technology-heavy Nasdaq-100 edged up 0.3%.

Stocks have been buffeted in recent days by spikes in coronavirus infection levels and uncertainty around the likelihood of a second batch of economic stimulus being delivered before Election Day. Investors say a new round of relief is needed to keep the U.S. economy in recovery mode.

"There are some pretty significant concerns that we're going to see a ramp-up in infections in the U.S.," said Ronald Temple, head of U.S. equity at Lazard Asset Management. "I am worried that could be a headwind between now and year-end."

The burst of infection could prompt authorities to bring in new curbs, Mr. Temple said, and is likely to make consumers more cautious. Many investors are overly bullish about the chances of a vaccine being developed and distributed, he said.

Pfizer said Friday it could be ready to apply for emergency-use authorization of its vaccine by late November, the first time a leading Western vaccine developer provided such a specific timeline. Shares in the pharmaceutical giant rose around 1% before the bell in New York.

White House and Democratic negotiators agreed Thursday to include a national coronavirus-testing strategy in relief legislation. Many Republican lawmakers are wary of approving another bill approaching $2 trillion in size, but President Trump on Thursday insisted they will back him despite their current misgivings.

"They might get something together, but it's really surprising that it hasn't happened yet," said Jonas Goltermann, senior markets economist at Capital Economics.

Another factor weighing on stocks is concern about how quickly drugmakers will be able to come to market with an immunization shot, Mr. Goltermann added, pointing to the pause in trials of Johnson & Johnson's vaccine. "That's arguably even more important than the fiscal stimulus."

More than half a dozen states reported record numbers of new coronavirus cases Thursday, pushing the U.S.'s single-day total above 60,000 for the first time in over two months. Midwestern states including Ohio, Wisconsin and Michigan were particularly hard hit.

Investors are awaiting the latest data on U.S. retail sales, due to be published at 8:30 a.m. ET. Sales likely rose for a fifth month in a row in September as consumers prepared for further months of working and studying from home by spending on appliances and vehicles.

Consumer spending may falter over the winter if Washington doesn't deliver a new round of stimulus, according to Mr. Temple. "The longer this persists without that extra unemployment benefit the more likely we are to see evictions, mortgage delinquencies and other kinds of credit defaults," he said.

Other data indicate the economy is already losing momentum. New applications for unemployment benefits, a proxy for layoffs, last week rose to the highest level since late August.

Earnings season is rolling on, with State Street, Bank of New York Mellon and oil-field-services company Schlumberger due to file quarterly results before the bell in New York. J.B. Hunt Transport Services is set to report earnings after the close of trading.

In overseas markets, European stocks recouped some recent losses, pushing the Stoxx Europe 600 up 0.4%. Asian markets were mixed by the close of trading, with China's Shanghai Composite Index ticking up 0.1% and Japan's Nikkei 225 losing 0.4%.

Giving European stocks a lift, Thyssenkrupp jumped 14% after the German industrial conglomerate said it was examining a bid by Liberty Steel Group to acquire its steel operations. Fellow steelmakers ArcelorMittal and Voestalpine also advanced.

European luxury stocks gained ground after LVMH Moët Hennessy Louis Vuitton said strong growth at its biggest fashion brands buoyed revenue in the third quarter. Shares in the region's auto makers climbed after Daimler sounded an upbeat note for the rest of 2020. Shares of Man Group rose 5.6% after the investment manager said funds under management grew in the third quarter.

Traders will also parse data in U.S. industrial production, due from the Federal Reserve at 9:15 a.m. ET, and a preliminary reading at 10 a.m. of the Michigan Consumer Sentiment Index for this month. Economists expect industrial output to have continued its recovery in September, though at a slower pace than earlier in the summer.

Yields on 10-year Treasury notes edged down to 0.722%, from 0.730% Thursday. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, ticked down less than 0.1%.

U.S. crude-oil futures fell 1.1% to $40.53 a barrel ahead of weekly data on the number of active oil rigs from Baker Hughes.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

10-16-20 0733ET


Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.80% 27463.19 Delayed Quote.-3.77%
NASDAQ 100 0.82% 11598.945265 Delayed Quote.31.74%
NASDAQ COMP. 0.64% 11431.350522 Delayed Quote.26.60%
NIKKEI 225 -0.29% 23418.51 Real-time Quote.-0.69%
S&P 500 -0.30% 3390.68 Delayed Quote.4.95%
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