By Mischa Frankl-Duval
U.S. stock futures slipped Friday, interrupting the sharpest weekly rally since April as investors focused on the still-undecided presidential election, surging Covid cases and fresh jobs numbers.
S&P 500 futures dropped 0.4% in recent trading, while those linked to the Dow were recently down 0.3%. Technology-heavy Nasdaq-100 futures declined 0.7%.
The markets pared their losses after the latest jobs report showed hiring picked up last month at a stronger pace than expected. The unemployment rate fell to 6.9% in October, better than the 7.7% figure economists surveyed by The Wall Street Journal had forecast. The U.S. economy added 638,000 jobs in October, more than the 530,000 projected.
Stocks have vaulted higher this week as the prospect of a split Congress reduced the chances of a corporate-tax hike should Democratic candidate Joe Biden win the presidency. Mr. Biden gained a lead over President Trump in Georgia early Friday morning and narrowed the gap in Pennsylvania. He was also leading in Arizona and Nevada, putting him within striking distance of the 270-electoral college votes needed to win the White House.
Overseas, the Stoxx Europe 600 fell 0.3%, dragged lower by shares in industrial goods and technology companies.
"I just think it's a pause for breath," said Altaf Kassam, head of investment strategy and research for Europe, the Middle East and Africa at State Street Global Advisors.
Mr. Kassam attributed this week's rally to a "goldilocks scenario," where a Republican Senate dilutes the power of a Democratic president, limiting his ability to enact tax increases or antitrust regulation against big tech companies. Though he expects the equity rally to continue, it won't do so at this pace.
"I can't imagine we'll continue seeing 2% moves every day," he said.
The relative weakness of stocks on Friday came a day after the Federal Reserve left policy unchanged, but highlighted rising risks to the economy from the coronavirus pandemic.
"There is a sense of urgency coming from the fact that the second wave, or the U.S. third wave, is becoming definitely much worse than I think we were expecting," said Luca Paolini, chief strategist at Pictet Asset Management.
The U.S. recorded another record-high day of newly reported coronavirus infections Thursday, with nearly 121,888 infections, according to data compiled by Johns Hopkins University. The tally is 18.5% higher than Wednesday's 102,831. More than 1,200 deaths were reported on Thursday, according to Johns Hopkins data, a figure not seen since mid-September.
Shares of at-home fitness company Peloton Interactive fell 3.9% premarket after the company reported higher revenue, but said high demand for its products had caused a backlog in deliveries and "unacceptably long wait times."
Videogame maker Take-Two Interactive Software shares rose 3% premarket after it posted surprise growth in net bookings and a larger profit on fewer new releases.
Shares of T-Mobile US jumped 5.8% after the company said it continued to add customers in the third quarter and told investors the cost-cutting plan it launched in the wake of its Sprint takeover is running ahead of schedule.
In commodities markets, U.S. crude oil prices dropped 3% to $37.64 a barrel, erasing some of the gains made earlier in the week amid hopes for longer, deeper supply cuts. Behind Friday's fall was a combination of rising coronavirus cases -- which is hampering crude's demand recovery -- and the protracted tallying of U.S. votes.
"A Biden victory is more likely to weigh on the oil price in the longer term because it makes rapprochement more probable in the Iran conflict and would see a greater focus on renewable energies," said Eugen Weinberg, head of commodities research at Commerzbank.
The prospect of a split Senate -- Sen. Kamala Harris may hold the balance of power if the Democrats win the White House -- the low likelihood of the current Senate approving a stimulus deal in 2020 and the potential refusal of President Trump to accept defeat were all providing pressure, Mr. Weinberg added.
Brent crude, the international benchmark for oil, fell 2.7%. Gold prices crept 0.2% higher, on course to end the week up more than 3.5%.
China's Shanghai Composite closed 0.2% lower, while Japan's Nikkei 225 index rose 0.9%.
Gunjan Banerji contributed to this article.
Write to Mischa Frankl-Duval at Mischa.Frankl-Duval@wsj.com
(END) Dow Jones Newswires
11-06-20 0906ET
