Stocks were set for a lower open on Wednesday as investors were cautious about the 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 clear a key hurdle 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 see as 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 the 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.
The only surprise would be if Bernanke comments on a potential QE3 program (during his speech). How he words his response will be very important, said Lawrence R. Creatura, a portfolio manager at Federated Investors in Rochester, New York.
The mention of QE3 would actually be negative for the market. People are worried about a continued pattern that involves issuing debt in one hand and purchasing it with another using the currency you are printing. Investors recognize that you can't continue this behavior for an extended period of time.
S&P 500 futures fell 3.5 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 27 points, and Nasdaq 100 futures shed 7.25 points.
In earnings news, shipping giant FedEx Corp
Adobe Systems Inc
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.
PostRock Energy Corp
(Reporting by Angela Moon; editing by Jeffrey Benkoe)