U.S. stock futures wobbled Wednesday as investors weighed the potential terms of the next stimulus bill and a slowdown in coronavirus infections while awaiting earnings from a string of major companies.
Futures tied to the S&P 500 wavered between gains and losses, suggesting that the benchmark index could be muted after the New York opening bell.
Overseas, the Stoxx Europe 600 edged up 0.3%. Most major stock markets in Asia closed higher.
Investors are largely focusing on companies’ guidance for the second half of the year as they seek to assess the pace of recovery among major American businesses. M anufacturing conglomerate 3M, pharmaceutical company Pfizer and fast-food chain McDonald’s are among those scheduled to report earnings starting at 6:30 a.m. ET.
“Corporate leaders happen to be less sanguine on the future than investors are,” said Fahad Kamal, chief market strategist at Société Générale’s private banking and wealth management division Kleinwort Hambros. “Markets seem to be pricing a return to normalcy by the end of the year, largely driven by vaccine news.”
Stock markets may tumble if a vaccine isn’t found and widely distributed by the end of the year, Mr. Kamal said.
U.S. coronavirus cases rose by 55,000 Monday, the slowest daily pace since July 7, giving investors cause for cautious optimism. Deaths also haven’t surged in the same way that coronavirus cases have over the past month. But some states are continuing to struggle with a rising number of infections, hospitalizations and fatalities.
Investors are also watching for progress on a stimulus bill proposed by Republicans. The current version of the plan, which will need to secure the backing of Democrats, suggests cutting the federal $600 weekly unemployment supplement to $200 through September, when the payment will then combine with state benefits to replace 70% of previous wages.
Dealers work in front of monitors at a bank in Seoul, South Korea.
Photo: jeon heon-kyun/Shutterstock“This week, the market focus will be solely on the negotiations between the Republicans and the Democrats,” said Wei Li, head of iShares EMEA investment strategy at BlackRock. “We’re talking about a really tight timeline for them to come through with something.”
Gold prices briefly hit an intraday record of $1,974.70 a troy ounce, before paring gains to trade down 0.7% to $1,918. The precious metal has soared in recent months, driven higher by the drop in inflation-adjusted interest rates caused by central banks’ efforts to bolster economic activity during the pandemic. Gold pays no income, so becomes more attractive to investors when yields on other assets decline.
Traders are now turning their focus to the conclusion of the Federal Reserve’s two-day policy meeting on Wednesday for cues about the outlook for monetary policy.
The yield on the benchmark 10-year U.S. Treasury note ticked up to 0.612%, from 0.609% Monday. Bond yields rise as prices fall.
Bullion has been buoyed by the gloomy global economic outlook.
Photo: David Gray/Bloomberg NewsIn Asia, the Shanghai Composite Index rose 0.7%, and South Korea’s Kospi climbed 1.8% by the end of the day. Japan’s Nikkei 225 fell 0.3%.
— Chong Koh Ping contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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July 28, 2020 at 03:56PM
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U.S. Stock Futures Waver Ahead of Corporate Earnings - The Wall Street Journal
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