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U.S. Stock Futures Point to Fourth Week of Declines

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09/25/2020 | 05:06am EDT

By Anna Isaac

U.S. stock futures wobbled Friday, putting the S&P 500 on course for a fourth straight week of losses.

Futures tied to the S&P 500 drifted between gains and losses, indicating another day of choppy trading after the opening bell. The index is down more than 2.2% so far this week. Contracts tied to the tech-heavy Nasdaq also wavered in a narrow range.

Investors' confidence has been crimped by elevated levels of new coronavirus infections in the U.S. and Europe, as well as some signs that the global economic recovery is slow and uneven. The uncertainty and political risks generated by November's presidential election is also adding to the jitteriness in markets.

"We're in a bit of a holding pattern. It feels like a bit of a phony market right now. I don't think there's any key factors that have changed," said David Coombs, head of multiasset investments at Rathbone Brothers. "Until we get a vaccine for the population at large, the coronavirus course is uncertain."

Investors are also awaiting signs of progress on additional U.S. stimulus spending from the government. House Democrats are readying a scaled-down package of around $2.4 trillion that would include assistance to airlines, restaurants and small businesses, according to people familiar with the matter. But Republicans said the chances of a deal before Election Day remained slim.

"We've had such a huge fiscal response already, it's easy to say the response now is disappointing," said Holger Schmieding, chief economist at Berenberg Bank. "It's basically a matter of time: before or after the election. Significant support is coming. The Fed is asking for it."

New data on durable goods orders, due out at 8.30 a.m. ET, will offer investors a view on whether U.S. manufacturers have continued to stage a rebound from shutdowns and supply-chain disruptions related to the pandemic. Orders in August for products designed to last at least three years are likely to post their fourth consecutive monthly gain. But economists are forecasting a slowdown in the pace of improvement in overall demand and underlying business investment amid uncertainty about the path of Covid-19.

Economic data will need to show continuous improvement if gains in stocks are going to be sustained, investors warned.

"As we go into the fourth quarter, risks are starting to pile up, making it harder for equities to make gains. It's the election risk, the Covid risk, and the fiscal risk," said Seema Shah, chief strategist at Principal Global Investors. "And then of course the economic data: we've had all the easy gains in the third quarter and we want to be sure that momentum isn't running out."

In bond markets, the yield on the U.S. 10-year Treasury was largely unchanged at 0.661%, from 0.664% Thursday.

Overseas, the pan-continental Stoxx Europe 600 edged down 0.2%.

The major Asian equity benchmarks ended the week on a mixed note. Japan's Nikkei 225 rose 0.5% Friday, while China's Shanghai Composite Index ticked down 0.1%.

Write to Anna Isaac at anna.isaac@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.10% 28335.57 Delayed Quote.-0.71%
NASDAQ 100 0.25% 11692.571891 Delayed Quote.33.55%
NASDAQ COMP. 0.37% 11548.281629 Delayed Quote.28.23%
NIKKEI 225 0.18% 23516.59 Real-time Quote.-0.77%
RATHBONE BROTHERS PLC 0.80% 1508 Delayed Quote.-29.20%
S&P 500 0.34% 3465.39 Delayed Quote.7.26%
S&P/CITIC 300 INDEX -0.25% 4090.33 Delayed Quote.15.17%
S&P/CITIC 50 INDEX -0.43% 4111.8 Delayed Quote.10.03%
STOXX EUROPE 600 0.62% 362.5 Delayed Quote.-13.36%
STOXX EUROPE 600 NR 0.62% 797.33 Delayed Quote.-11.71%
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