Stock index futures dipped on Wednesday as investors were cautious on what direction the Federal Reserve would take to deal with renewed weakness in the economy.
Stocks posted gains for the fourth straight day on Tuesday on growing hopes Greece would take a key step to avoiding a debt default, adding momentum to a recent rebound. The Nasdaq posted its biggest percentage gain since October, while the S&P 500 marked its best day in two months in what traders believe could be continued short-term buying from deeply oversold levels.
The Greek government survived a key vote of confidence Tuesday, enabling Athens to push ahead with tough austerity measures to avoid a default. For details, see ]
All eyes will be on the U.S. Fed's policy meeting and comments from Federal Reserve chairman Ben Bernanke at a news conference later Wednesday. A statement from the Federal Open Market Committee is due at 12:30 p.m. EDT, followed by Bernanke's press conference at 2:15 p.m. EDT.
The Fed is likely to acknowledge renewed weakness in the U.S. economy and reiterate its commitment to keeping interest rates low for an extended period. Investors will look for clues on new measures to support the economy as the Fed's second quantitative easing program comes to an end.
Reality quickly shifts the market focus back to the global economy and its growth prospects, and the Fed meeting today will highlight that, said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.
In terms of doing more (to) boost asset prices again or doing less, also known as exit, (Bernanke) will unlikely commit to anything with the huge amount of uncertainty on the outlook.
S&P 500 futures fell 1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures fell 8 points, and Nasdaq 100 futures shed 3.75 points.
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Net short positions by hedge funds on the S&P 500 have recently increased, according to Societe Generale's cross-asset research team. Hedge funds have also turned increasingly to shorting government bonds, especially at the long end of the curve, although overall positions remained fairly limited.
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(Reporting by Angela Moon; editing by Jeffrey Benkoe)