US stock futures edge higher, gold rallies
Futures tied to the S&P 500 gained 0.5%, pointing to a rise in the benchmark index after the New York opening bell
U.S. stock futures ticked higher Wednesday ahead of fresh data assessing recovery in the American services sector and job market.
Futures tied to the S&P 500 gained 0.5%, pointing to a rise in the benchmark index after the New York opening bell. The pan-continental Stoxx Europe 600 advanced 0.8%.
Shares in Walt Disney rose over 5% in offhours trading after the media and entertainment company reported strong subscriber growth for its streaming service.
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Gold gained 1.5% to $2,050.70 a troy ounce, extending a bull run that has gained momentum during the coronavirus pandemic. This year’s sharp drop in yields on U.S. Treasurys to levels below the expected pace of inflation is making gold, which doesn’t generate an income, more attractive as a store of value. The precious metal, viewed as a haven asset, is also drawing investors concerned that the economic fallout from the pandemic may lead to another rout in stocks.
In bond markets, the yield on the 10-year Treasury ticked up to 0.526%, from 0.514% Tuesday, which was the second-lowest closing level this year. Government bond yields, which move inversely to price, have weakened in recent weeks following guidance from major central banks that interest rates are likely to remain low for an extended period.
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Investors will get fresh insights into how employment held up last month in the nonfarm private sector when the ADP National Employment Report is released at 8:15 a.m. ET.
Economists have worried that a rise in U.S. coronavirus infection rates last month could curtail economic recovery as some regions moved to impose local restrictions to curb the number of cases. This week, new coronavirus cases have inched lower, lending to optimism for faster economic recovery.
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“What we have had so far is where economic activity and infection rates have been decoupled,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “Going forward, we are going to have them much more coupled together. Economic activity and infection rates are going to be much more closely linked.”
Data company IHS Markit is also scheduled to release figures showing activity in the services sector for July at 9:45 a.m., and the Institute for Supply Management will release a measure of activity in the U.S. nonmanufacturing sector at 10 a.m.
Investors are also watching negotiations between White House officials and Democrats over a new coronavirus-relief package. While the two have yet to bridge differences in unemployment payments and other aid proposals, Treasury Secretary Steven Mnuchin said they aim to reach a deal by the end of the week, with lawmakers voting on the proposal next week.
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Deteriorating relations between Beijing and Washington are also on the radar for markets, and are likely to weigh on investors’ sentiment.
The U.S. and China have agreed to high-level talks on Aug. 15 to assess Beijing’s compliance with the bilateral trade agreement signed early this year, The Wall Street Journal reported late Tuesday. While that meeting will be closely monitored, Health and Human Services Secretary Alex Azar’s decision to visit Taiwan in coming days to discuss the pandemic could become another irritant in the ties with China.
The corporate earnings season remains under way, with CVS Health and Costco Wholesale among those reporting on Wednesday.
Write to Caitlin Ostroff at firstname.lastname@example.org