Stocks indexes futures edged lower on Wednesday as investors were cautious ahead of a speech by Federal Reserve Chairman Ben Bernanke and an auction of 10-year Treasury notes amid concerns about rising yields.
European stocks <.FTEU3> fell 0.2 percent on ongoing concerns about the credibility of Greece's aid package as a top Greek official said local banks, hit by a series of credit rating downgrades, asked for more financial support.
Bernanke is due to speak on Economic Challenges: Past, Present and Future at a Dallas luncheon. Investors will scour his testimony for clues about the Fed's thinking on interest rates and the economy, given recent better-than-expected economic data.
The Treasury will sell 10-year notes as the prospect of a stronger economy has pushed the yield on the note -- a benchmark for mortgage rates -- up toward 4 percent. Investors worry that if rates go too high, it may damage a housing market that is struggling to recover.
It will be interesting to see if demand is strong (and) whether or not the 10-year (Treasury note) moves above the 4 percent rate. If rates were to go above 4 percent, that could intensify selling in the equity markets, said Peter Cardillo, chief market economist at Avalon Partners in New York.
S&P 500 futures fell 4 points and were below 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 dropped 23 points, and Nasdaq 100 futures lost 4.5 points.
U.S. equities have been strong recently as five weeks of gains pushed major averages to highs not seen in a year and a half. The Dow continues to eye the psychologically important 11,000 level.
The market has had a nice run here, said Cardillo. It's only natural to have some profit taking without any real catalyst to move the market higher.
Shares in Family Dollar Stores Inc
Shares of U.S. coal miner Peabody Energy Corp
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)