By Joe Wallace and Gunjan Banerji
The S&P 500 ticked higher Friday but logged a loss for the week, snapping a three-week winning streak.
Money managers say stocks are likely to lack clear direction in the coming week as investors avoid placing big bets ahead of the Nov. 3 election. They are looking instead to a flurry of economic and corporate-earnings reports for a clearer picture of the economic outlook, as rising coronavirus cases threaten to slow the recovery.
"It's so hard to take this information from the election and translate it into anything concrete," said Matt Rowe, managing partner at Headwaters Volatility. "We just don't know."
The broad stock-market gauge wavered for much of the day before its gains accelerated at the tail end of the trading session. The S&P 500 added 11.90 points, or 0.3%, to 3465.39 on Friday. The Dow Jones Industrial Average slipped 28.09 points, or 0.1% to 28335.57. The Nasdaq Composite rose 42.28 points, or 0.4% to 11548.28.
The S&P 500 lost 0.5% for the week. The Dow and Nasdaq each lost about 1%.
White House officials and Democratic leaders have continued negotiations over a nearly $2 trillion coronavirus-relief package, which many investors view as crucial to maintaining the economic recovery. Reported coronavirus cases in the U.S. have risen lately. And earnings season is in full swing, with the technology companies that have powered the stock market higher due to report next week.
Investors are increasingly optimistic that a second dose of stimulus will be delivered, even if many think the odds of a deal before the election are slim. Stocks in sectors that are sensitive to the outlook for the economy, including energy and banks, outperformed this week. Information-technology stocks faltered.
"The message from markets is that fiscal stimulus is coming and it should have a positive impact on U.S. growth," said Paul O'Connor, head of multiasset at Janus Henderson Investors. Janus has booked profits from tech stocks and bought shares of regional U.S. banks, which stand to benefit from a strengthening economy, he said.
In another sign that investors expect quicker growth and inflation, the bond market's yield curve has steepened. The yield on 10-year Treasury notes rose to 0.840% Friday from 0.743% at the end of last week, logging its biggest one-week yield gain since August. Yields on two-year notes haven't risen as fast, inching to 0.153% Friday from 0.143% at the end of last week.
On Friday, fresh data showed that overall business activity in the U.S. expanded. The flash reading for the U.S. Composite Output Index came in at 55.5 in October, up from the 54.3 registered in September. That's the fastest increase in private sector business activity since February 2019.
"That's going to continue to be a back and forth in the market -- are we going to continue to get economic growth or are we going to get a lockdown," said Pete Santoro, a senior portfolio manager at Columbia Threadneedle.
In Europe, the economic outlook is gloomier amid a large second wave of coronavirus infections that has prompted governments to restrict travel and leisure. Data firm IHS Markit said Friday its composite purchasing managers index for the eurozone fell to 49.4 in October, indicating a decline in manufacturing and services activity.
Investors were also parsing the latest batch of quarterly earnings. More than a quarter of companies on the S&P 500 had reported through Friday, and about 84% of them had beaten analysts' forecasts for earnings, according to FactSet.
Shares of American Express fell $3.81, or 3.6%, to $100.98 after third-quarter earnings missed expectations. Intel shares dropped $5.70, or 11%, to $48.20 after quarterly revenue and earnings fell, a sign the chip giant may be seeing an end to the work-from-home boost.
Asian markets were mixed, with the Shanghai Composite Index closing 1% lower and Japan's Nikkei 225 eking out a 0.2% gain.
Write to Joe Wallace at Joe.Wallace@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires