Stock index futures rise ahead Bernanke, Bush

By @ibtimes on

U.S. stock index futures pointed to a firmer opening on Friday, with all eyes on speeches by Federal Reserve Chairman Ben Bernanke and President George W. Bush, both expected by analysts to touch on the U.S. subprime crisis.

At 4:05 a.m. EDT, futures indicated that Wall Street's three leading indexes would open between 0.6 and 0.8 percent higher.

The indicative Dow Jones index, which tracks the Dow stocks as they are traded in Frankfurt, was up 0.4 percent.

Bernanke's speech on Housing and Monetary Policy at 1400 GMT will be closely watched, said analysts, for any hint whether the Fed will cut its key interest rate on September 18.

Market focus is likely to be mainly on Bernanke's speech, ABN AMRO said in a note.

Given recent market volatility, there is a much higher probability that Bernanke will address the Fed's latest thoughts, especially as the topic of the speech is on monetary policy and housing, ABN AMRO said.

We suspect that Bernanke will not want to close any doors, although we believe he will further position the Fed as making no move before the next FOMC, the Dutch bank added, referring to the Fed's next scheduled monetary policy meeting.

Speaking at 1510 GMT, Bush is expected to propose reforms intended to help subprime mortgage holders avoid default. It will be the president's first public step to address the crisis that has created turmoil in financial markets around the world.

He (Bush) will announce that the Federal Housing Administration, which insures mortgages for low-income borrowers, will guarantee loans for delinquent borrowers, UniCredit said in a research note.

ALL CLEAR?

This would allow the delinquent borrower to refinance at more favorable rates. Obviously, this refinancing will not only help borrowers, but also their initial lenders, UniCredit said.

Is this the end of the financial turmoil? We do not believe so, as the infection of other credit markets already became an illness of its own, the Italian bank said.

On Thursday, U.S. stocks fell amid mounting concerns that the credit market upheaval will erode bank profits and hold back consumer spending ,although optimism about corporate investment helped lift technology shares.

The Dow Jones industrial average fell 0.4 percent to end at 13,238.73 points. The Standard & Poor's 500 Index also lost 0.4 percent while the Nasdaq Composite Index rose 0.1 percent.

After Thursday's closing bell, shares of computer maker Dell Inc rose nearly 1 percent after the company posted preliminary results and said it continues to pursue job cuts.

Dell traded 2 percent higher in Frankfurt at 0800

GMT.

No S&P 500 firms are scheduled to report results on Friday but the U.S. macro economic calendar is replete with data.

Personal income and consumption data are due at 1230 GMT, the New York NAPM index of regional business activity at 1300 GMT, the National Association of Purchasing Management-Chicago's index of manufacturing activity at 1345 GMT as well as July factory orders and the Reuters/University of Michigan's final consumer sentiment index, both at 1400 GMT.

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