Wall Street was heading for its worst week in nearly a year, with index futures little changed on Friday as macroeconomic concerns keep markets volatile and overshadow the start of U.S. corporate earnings season.
Europe's sovereign debt crisis, stalled budget talks in Washington and an uncertain economic backdrop have sent Wall Street on a roller coaster ride since the spring.
A health check of European banks is expected to show that as many as 15 lenders need more capital to withstand a prolonged recession, with criticism growing that the tests do not encompass the impact of a Greek default.
We expect it to continue to be a roller coaster, driven by the European stress test, the U.S. debt and tax agreements ... and earnings, said Kim Caughey Forrest senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
We have all this crazy stuff going on that normally the market doesn't have to deal with, and certainly doesn't have to deal with all at the same time.
Ratings agency Standard & Poor's warned there was a 1-in-2 chance it could cut the United States' triple-A rating if a deal to raise the government debt ceiling is not reached soon.
Global events have overshadowed stronger earnings from big U.S. companies like Google
S&P 500 futures rose 1.6 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 rose 31 points, and Nasdaq 100 futures added 8 points.
The S&P 500 is down 2.6 percent this week, its worst week since the middle of August, 2010. Two weeks ago Wall Street posted its best week in two years.
The Nasdaq will be in focus after Google Inc
There was some high profile acquisition activity. Top global miner BHP Billiton
Billionaire investor Carl Icahn said he and his affiliates offered to buy shares of Clorox Co
President Barack Obama suspended U.S. budget negotiations for the day to give congressional leaders a chance to come up with a plan of action on how to unblock talks meant to cut deficits and avert a debt default.
U.S. stocks fell on Thursday as Fed Chairman Ben Bernanke backed off hints additional near-term stimulus could be on the way, undercutting comments from a day earlier that spurred a late-session rally in equities.
The U.S. consumer price index (CPI), due at 8:30 (1230 GMT), is seen falling 0.1 percent in June after a 0.2 percent rise in May, giving an unchanged annualized inflation rate of 3.6 percent.
July's Empire State index is also due at 8:30 (1230 GMT), when investors will look for signs of stabilization in the manufacturing sector, while the July Reuters/University of Michigan consumer sentiment survey will be released at 9:55 (1355 GMT).
(Editing by Kenneth Barry)