By Anna Hirtenstein
U.S. stock futures edged up Wednesday, following the S&P 500's shuffle to a record close, with negotiations stalled for further coronavirus aid and rising tensions between Washington and Beijing.
Futures tied to the S&P 500 gained less than 0.2%. The benchmark stock index's sharp rally since late March, fueled in part by stimulus measures from the central bank and the government, has erased its historic plunge this year, leaving the S&P 500 up 4.9% for the year.
A string of economic figures in recent weeks has pointed to signs of a rebound in the American labor market, the manufacturing sector, retail sales and consumer spending. Optimism among some people that the U.S. may be on its way to a quick recovery has helped trigger a rally in stocks across a range of sectors, though others remain nervous about the sustainability of the economic rebound.
The market has for some weeks also been counting on additional stimulus spending by the government to bolster consumer confidence. But talks between Republicans and Democrats remain stalled, Treasury Secretary Steven Mnuchin said Tuesday, though bipartisan appetite for a deal remains high. Negotiations with House Speaker Nancy Pelosi may resume this week, he said.
"There's a strange combination of things going on at the moment: There's some better economic data, proving to be a bit supportive of equities, but running alongside that are the fiscal risks in the U.S. and the weaker dollar," said Georgina Taylor, a multiasset fund manager at Invesco. "I don't think the moves in markets are very consistent."
Signs of an escalating rift with China have also weighed on global markets in recent weeks.
Major stock benchmarks in China and Hong Kong slipped after President Trump said he canceled trade talks with Beijing last weekend and seemed to hint that he could pull out of the phase-one trade deal, according to analysts at Deutsche Bank.
His administration has also urged university endowments to divest their holdings of Chinese stocks ahead of the companies potentially being delisted from American exchanges, the analysts said.
The Shanghai Composite Index fell 1.2% by the close of trading, its biggest decline in over three weeks. Hong Kong's Hang Seng Index retreated 0.7%.
A key focus area on Wednesday is likely to be the release of the minutes from the last Federal Reserve meeting, due out at 2 p.m. ET. That is expected to provide more insight into changes that Fed officials are weighing for monetary policy.
Benchmark 10-year Treasury yields ticked lower to 0.650%, from 0.669% on Tuesday.
In Europe, the pan-continental Stoxx Europe 600 rose 0.2%.
Coronavirus infection rates have been on the rise in the region after restrictions eased, raising concerns that there may be additional lockdowns, which would stifle business activity and slow the economic recovery. German Chancellor Angela Merkel's comments Tuesday that constraints wouldn't be further loosened in her country because of the spike in new infections has stoked such concerns, analysts said.
"We particularly start to wonder about the nervousness in Europe as the virus picks up, particularly in Germany, if it will impact growth and limit the recovery as we start to think about 2021," said Andrew Cole, head of multiasset at Pictet Asset Management. "The market is starting to worry about this."
In European equities, Danish shipping giant AP Moller-Maersk rose 4.8% after its net profit beat analysts' expectations in its latest earnings report, despite a slowdown in global trade from the pandemic. German utility RWE declined 3.7% after a new stock issue that increased its float by 61.5 million shares.
Ahead of the bell in New York, Gilead Sciences slipped 5.9% after it said the Food and Drug Administration expressed concerns about the risks of an arthritis drug it has under development. Home improvement retailer Lowe's rose 2.1% premarket after it reported a jump in net profit and earnings per share compared with the previous year in its quarterly earnings report.
Oil prices edged down ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies, where they are expected to discuss the supply cuts currently in place. Brent crude, the international benchmark for oil, declined 1% to $45.01 a barrel.
Gold declined 0.8% to $1,996.90 a troy ounce, partially reversing two days of gains that saw the metal rally about 3%. This is likely a sign that some traders are selling the precious metal to lock in profits from the recent rally, according to Pictet's Mr. Cole.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
