Stocks were set to post their best week in nearly a year on Friday as investors looked ahead to key national manufacturing data, with confidence growing that the economic slowdown could be temporary.

Index futures fluctuated between slight gains and losses in what looked like a low-volume, erratic session ahead of a holiday-shortened week.

Equities have rallied for four straight days, rebounding from a spate of weakness over the last two months. Moves to avert a debt crisis in Europe and surprisingly strong regional business data helped lift some of the gloom on Wall Street.

The ISM's index of national factory activity, at 10 a.m. EDT, is expected to show the economy slowed in June, slipping to 51.8 from 53.5 in May. But investors will be on the lookout for a positive surprise after Thursday's Chicago PMI index beat forecasts.

We have gotten to the point two weeks ago, when we had fully prices in a tremendous global growth slowdown, said John Brady, senior vice president at MF Global in Chicago. The Chicago PMI suggests, hey you know what, maybe we've come too far.

The latest overseas data was sobering. The global manufacturing sector, a key driver of economic growth, lost steam for a second month running as monetary policy tightening began to bite, surveys showed.

S&P 500 futures dipped 0.5 point and were above 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 gained 27 points, and Nasdaq 100 futures rose 0.5 point.

Markets are closed on Monday for the Independence Day holiday.

The S&P 500 <.SPX> climbed above resistance at its 50-day moving average at 1,317, establishing another floor in the market after the index moved above a number of technical resistance levels.

In company news, Oshkosh Corp jumped more than 8 percent in extended trade Thursday after Carl Icahn said he wants to meet with the management at the specialty truck maker to discuss enhancing shareholder value. The billionaire investor owned about 9.5 percent of Oshkosh shares as of June 20.

Eastman Kodak Co dropped 15 percent to $3.05 in premarket trade after a U.S. trade panel upheld portions of a ruling unfavorable to the company in a patent fight over digital camera technology in cell phones.

Investors are looking ahead to second-quarter earnings, which get underway in the second week of July, paying close attention to corporate forecasts, given the weakness in the economy.

There is also the ongoing battle over increasing the national debt ceiling, which has raised the prospect of a government shutdown and even a U.S. debt default.

The big thing on the horizon is now back to the U.S. deficit issues, said Rick Meckler, president of investment firm LibertyView Capital Management in New York. The Greek (debt) situation was an appetizer for that, and I think you're going to see a lot of back and forth.

In what could be a portent of national events, Minnesota's state government is expected to shut down going into the July 4 holiday after Democratic and Republican legislative leaders failed to reach a budget deal.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)