U.S. stock index futures were flat on Tuesday as investors continued to take a wait-and-see approach ahead of a key speech by Federal Reserve Chairman Ben Bernanke later this week while oil rose on worries about a tropical storm’s impact on U.S. production.
Oil analyst Stephen Schork said in an e-mail commentary that traders are focusing on the Venezuelan refinery fire, Tropical Storm Isaac and U.S. consumer confidence, which he said was expected to rise for the month of August.
Crude oil rose 0.7 per cent even as threats to production in the Gulf of Mexico from Tropical Storm Isaac appeared to lessen.
Forecasts for Isaac have been toned down, easing concerns that the storm could damage key oil and gas operations along the U.S. Gulf Coast.
Weather forecasters now say the storm will grow to a Category 1 hurricane instead of a stronger Category 2.
Although the storm isn’t expected to damage refineries, refinery owners often shut down operations in advance of a storm. The refineries will likely stay off line for about three days.
Mr. Schork also noted rising consumer confidence is a sign that Americans might be ready to spend, which could lead to an increase in fuel consumption and move prices higher.
Meanwhile, equities haven’t moved much in recent sessions, with market participants reluctant to make big bets ahead of a speech by Mr. Bernanke on Friday at a conference in In Jackson Hole, Wyoming.
Mr. Bernanke is expected to sustain expectations for a third round of quantitative easing, though he could keep markets guessing about the timing of such an action. The S&P 500 has dipped 0.2 per cent over the past three sessions.
“There’s no consensus on what Bernanke will say, and there seems to be a split among Fed presidents about whether something needs to be done, so until we know, everyone is just waiting,” said Tim Speiss, head of personal wealth advisors at EisnerAmper in New York.
Stocks have risen almost 8 per cent over the past three months, in large part on growing expectations for stimulus measures. That has led some analysts to say any new Fed policy is already priced in, and that no stimulus would be a catalyst for losses.
S&P 500 futures fell 0.5 point and were slightly under 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 fell 2 points and Nasdaq 100 futures rose 1.25 point.
The S&P 500 has had trouble staying above the April high of 1,422.38, which is seen as a key resistance point. It has also found support at 1,400.
A clue on the pace of U.S. economic activity will come with the June S&P Case/Shiller Home Price Index, due at 9 a.m. ET, as well as August consumer confidence data from the Conference Board, due at 10 a.m.. Home prices are seen rising 1.6 per cent from the previous month, while confidence is expected to tick very slightly higher from the previous month.
“The economy is improving, just very slowly,” said Mr. Speiss. “If there was a stronger trend in the data, we wouldn’t expect Bernanke to be so measured.”