U.S. stock index futures rose on Friday as investors stepped back into equities ahead of a much-anticipated speech by Federal Reserve Chairman Ben Bernanke.
Mr. Bernanke, addressing a symposium of central bankers in Jackson Hole, Wyoming, will likely acknowledge the Fed is actively considering another round of monetary easing in his keynote speech at 10 a.m. ET.
Trading was thin this week and lacking dramatic price moves, but on Thursday, investors took decisive action to lock in profits ahead of the speech. Stocks dropped solidly, with the Nasdaq down more than 1 per cent and the S&P closing below 1,400 for the first time since Aug. 6.
Turnover has been paltry, with this week’s four days so far being among the five lowest for volume this year.
Thursday’s retreat could indicate that the market is now less vulnerable for a selloff, though financial market participants remain cautious ahead of the Fed speech, as well as a meeting of the European Central Bank on Thursday that is expected to take pressure off highly indebted countries.
Mr. Bernanke could disappoint markets if he stops short of signaling that another bond-buying program is imminent. Markets have advanced in recent months, buoyed by expectations for a third round of quantitative easing.
Sectors tied to the pace of economic growth, including energy and financials, are likely to be impacted the most by Mr. Bernanke’s remarks. Defensive groups like utilities or health care may have a more muted reaction.
S&P 500 futures rose 8.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 80 points and Nasdaq 100 futures rose 20.25 points.
For the week, the S&P is down 0.8 per cent, though the index barely budged over the first three sessions of the week - resulting in a decline of just 0.05 per cent. The Dow is down 1.2 per cent for the week and the Nasdaq is off 0.7 per cent.