Stock-index futures edge back ahead of retail sales data

(MarketWatch) – U.S. and Chinese officials this weekend are meant to review China’s compliance with the phase one trade deal

Stock-index futures pointed lower Friday, with investors awaiting data on July retail sales to gauge consumer spending.

Market participants were also bracing for a round of virtual trade talks between the U.S. and China this weekend against a backdrop of rising tensions between the two countries.

What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00 were down 73 points, or 0.3%, at 27,750, while S&P 500 futures ES00 lost 2.20 points, or less than 0.1%, to trade at 3,365.50. Nasdaq-100 futures NQ00 were positive, however, rising 24.75 points, or 0.2%, to 11,200.

The Dow on Thursday DJIA fell 80.12 points, or 0.3%, to end at 27,896.72, while the S&P 500 SPX lost 6.92 points, or 0.2%, to close at 3,373.43, after hitting an intraday peak at 3,387.24, temporarily trading above its Feb. 19 closing record of 3,386.15. The Nasdaq Composite COMP rose 30.27 points, or 0.3%, higher to close at 11,042.50. The major indexes remain on track for weekly gains.

What’s driving the market?
Analysts said the continued deadlock between congressional Democrats and the White House over a coronavirus aid package could be limiting upside for the market. Negotiations to extend measures, including $600 a week in additional unemployment benefits, that expired at the end of July have remained stalled since the end of last week. President Donald Trump last weekend signed executive orders that would partially extend some measures but those face questions about their legality and logistics.

Meanwhile, virtual talks between U.S. and Chinese officials this weekend are meant to review China’s compliance with the phase one trade deal agreed last year. Unease surrounds the talks given growing tensions over China’s actions in Hong Kong and other issues.

For investors “to increase their risk exposures again, US Democrats and Republicans may have to agree over a new fiscal package, and U.S. and Chinese officials may need to provide encouraging remarks over their nations’ trade relationship,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.

The tone for global equities wasn’t helped by a 1.1% decline in Chinese retail sales in July, versus expectations for a flat reading.

U.S. July retail sales data is due at 8:30 a.m. Eastern. Economists surveyed by MarketWatch were looking for a 2% rise after a 7.5% jump in June. Excluding autos, sales are forecast to rise 1.1% after a 7.3% gain in June.

Second-quarter productivity and unit labor costs figures are also due at 8:30 a.m. Productivity is expected to show a 1.4% increase, while costs are forecast to rise 8.7%.

July industrial production is forecast to show a 2.7% rise, while capacity utilization is expected to rise to 70.5% from 68.6% in June. An initial reading on the University of Michigan’s August consumer sentiment index is due at 10 a.m. Eastern, as is data on June business inventories.

Which companies are in focus?
Epic Games, the maker of “Fortnite” launched a legal battle with Apple Inc. AAPL after the iPhone maker removed the hit game from its App Store. Epic accused the tech giant of seeking to “unlawfully maintain its monopoly.”
Shares of Applied Materials Inc. AMAT rose 3.7% in premarket trade after the chip maker supplier late Thursday reported results and an outlook that topped Wall Street forecasts.
DraftKings Inc. DKNG shares were off 2.1% in premarket trade after reporting a wider-than-expected loss, though revenues topped Wall Street expectations. The stock was already under pressure after Bloomberg reported that the Internal Revenue Service will require fantasy sports companies to pay federal excise taxes on their entry fees.

How are other markets trading?
In Asia overnight Friday, China’s CSI 300 index 000300 closed 1.5% higher, while Hong Kong’s Hang Seng Index HSI slipped 0.2% and Japan’s Nikkei 225 NIK gained 0.2%.

In Europe, the Stoxx 600 Europe Index SXXP traded 1.2% lower and the FTSE 100 UKX slumped 1.5% on Friday, after a similar tumble in the previous session.

The yield on the 10-year Treasury note TMUBMUSD10Y rose was little changed at around 0.71%, touching its highest yield since June 17. Bond prices move inversely to yields.

Gold prices GC00 declined $16.40, or 0.8%, to reach $1954 an ounce, following a 1.1% gain on Thursday. Crude-oil prices CLU20 added 4 cents, or about 0.1%, to $42.28 a barrel.

The greenback continued its slide, with the ICE U.S. Dollar Index, DXY a gauge of the buck against a half-dozen major rivals, down 0.2% to 93.193.