By Joe Wallace

U.S. stock futures edged higher Friday, suggesting the S&P 500 is on track for its biggest weekly advance since late August after investors welcomed negotiations for a fresh round of economic stimulus.

Futures tied to the S&P 500 ticked up 0.4%, signaling muted gains for the U.S. stock market after the opening bell. Contracts for the Nasdaq-100 edged up 0.3%, after the technology-heavy Nasdaq Composite closed at its highest level since early September on Thursday.

Sentiment in the market has been boosted this week by signs that Congressional leaders and White House officials are trying to bridge differences over a new batch of spending measures to help airlines, small businesses and households. House Speaker Nancy Pelosi said Democrats would be willing to move forward with support for airlines, but only if it goes hand-in-hand with talks for a deal to deliver broader relief.

Though few investors or lawmakers think sweeping measures will be introduced before the Nov. 3 election, the resumption of talks fueled optimism that spending targeted at certain sectors of the economy may be forthcoming. Many money managers say extra unemployment benefits that lapsed in August should be renewed to support consumer spending as coronavirus cases climb.

"For the market to move higher, we need to see further stimulus in the U.S., to ensure that the recovery that is still ongoing can be at least smoothed over," said Brian O'Reilly, head of market strategy at Mediolanum International Funds.

Still, he himself remains skeptical. "The market is probably overly optimistic at this stage that they're going to get some deal."

The U.S. reported more than 56,000 new coronavirus cases on Thursday, the highest daily total since mid-August. Fresh data have shown that the recovery in the labor market is slow and halting, with more businesses making layoffs permanent. Federal Reserve Chairman Jerome Powell said this week that there could be potentially tragic economic consequences if the government doesn't intercede.

Shares in sectors that are highly sensitive to economic growth have driven the week's gains, one sign of increasing confidence that new stimulus measures will arrive. Energy and materials companies' stocks have jumped, after trailing technology stocks for most of 2020.

Former Vice President Joe Biden's increasing lead in opinion polls also bolstered stocks this week by reducing the chances of protracted uncertainty after Election Day, according to Sophie Huynh, cross-asset strategist at Société Générale.

"The sectors that have been performing quite well: It's all the sectors that have been lagging," Ms. Huynh said. "The uncertainty of a delayed, of a contested election, is somewhat fading."

That has prompted some investors who had been waiting until after the election to buy shares in sectors that depend on strong economic growth to act now, according to Ms. Huynh.

Ahead of the opening bell in New York, shares of Advanced Micro Devices slid 2.4% after The Wall Street Journal reported that the company is in talks to buy rival chip maker Xilinx. The deal could be valued at more than $30 billion and mark the latest tie-up in the rapidly consolidating semiconductor industry.

In bond markets, the yield on 10-year U.S. Treasury notes ticked up to 0.766%, from 0.764% Thursday. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, slipped 0.2%, putting it on course for a third consecutive day of declines.

International markets broadly advanced, led by shares in China, where trading reopened after a holiday and a private gauge showed services activity accelerated in September. The Caixin China services purchasing managers index rose for a fifth straight month above the 50 mark that separates expansion and contraction.

The Shanghai Composite Index jumped 1.7% and the yuan climbed 0.6% to trade at 6.70 yuan to the dollar in the offshore market. The tightly controlled onshore yuan jumped more than 1.2% against the dollar, catching up with moves in the offshore market while mainland China had been closed for holidays.

Oil prices edged lower as traders tracked the progress of Hurricane Delta, which has brought offshore production in the Gulf of Mexico to a near standstill. U.S. crude futures dropped 0.5% to $40.95 a barrel. That still leaves them on course for their biggest one-week advance since June.

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

(END) Dow Jones Newswires

10-09-20 0543ET