Stocks were set to edge lower at the open on Friday, following a late Wall Street rally, as investors positioned for the expiration of futures and options contracts.
Four types of June equity futures and options contracts expire Friday, a convergence known as quadruple witching. Traders expected a quiet session as volatility has receded lately.
Trading is going to be totally dominated by options and futures expirations, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
Futures expire first and everybody's going to jockey for positions on the options side, so volatility could come late in the session, Mendelsohn said.
S&P 500 futures fell 1.6 points and were flat in terms of 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 dipped 6 points and Nasdaq 100 futures shed 3.5 points.
At Thursday's close, open interest in the SPDR S&P 500 fund , an ETF pegged to the S&P 500, showed calls and put options clustered around the $110 strike.
This suggests the S&P 500 index could hover around the 1,110 level as stocks and indexes tend to close near a strike price that has significant open interest and heavy trading in both put and calls.
The SPY was down 0.45 percent at $111.63 in early electronic trading.
The euro, a yardstick used lately by traders to gauge risk aversion, held at three-week highs against the U.S. dollar and was on track for its second straight positive week and its strongest week in percentage gains in at least nine months.
BP Plc New York-traded shares rose 3.1 percent to $32.68 premarket after its chief executive survived a bruising appearance before a U.S. congressional committee, and on hopes its $20 billion oil spill compensation and clean-up fund will cap public anger.
CVS Caremark Corp rose 5.3 percent to $33.55 and Walgreen Co added 8.5 percent to $31.76 premarket after the companies said they patched up their fight over reimbursements for drug prescriptions, salvaging a relationship worth billions of dollars.
Motorola Inc will buy back most of its debt and pump the bulk of its remaining cash into a proposed spinoff of its money-losing mobile devices unit, the Wall Street Journal reported, citing sources.
U.S. stocks edged higher Thursday in a choppy, thinly traded session as investors built on technical momentum.
The S&P 500 has held above its 200-day simple moving average since Tuesday in a bullish signal, but could find resistance near the 1,121 level, a key technical level that marks the 50 percent retracement of its decline from the October 2007 historic highs to the lows of March 2009.
(Additional reporting by Angela Moon; editing by Jeffrey Benkoe)