US pre-open: Stocks seen higher ahead of Fedspeak

US futures pointed to firmer open on Friday after the main indices ended off their highs in the previous session, with Fedspeak very much in focus.

At 1230 GMT, Dow Jones Industrial Average and Nasdaq futures were up 0.5%, while S&P 500 were 0.4% firmer, helped in part by a pullback in bond yields as the key US 10-year Treasury note dropped below 2.9%.

David Morrison, senior market strategist at GKFX, said: "Yet despite these gains the only thing which anyone can say with certainty is that the jury’s still out when it comes to predicting the next big move for US stock indices. So far this week the majors have failed to break conclusively either to the up or downside, reflecting uncertainty amongst investors. This suggests that there’s a new-found wariness of following the old tried and tested strategy of buying every dip, however modest. But by the same token, traders are not yet ready to cut their long-side exposure to equities to any appreciable degree."

Earlier this week, there was a number of occasions on which rallies were curtailed by aggressive selling. This was particularly apparent on Wednesday after the release of minutes from the Fed’s last FOMC meeting at the end of January, when the major indices reversed initial gains for a high-to-low swing of 2% in both the Dow and the S&P.

With no major data releases due, investors will turn their attention to speeches from Fed officials for further clues on future monetary policy.

"We may get some resolution by tonight’s close. However, investors may be wary of taking on too much risk ahead of new Fed Head Jerome Powell’s testimony in Washington next week on monetary policy. Once again, bond yields will be key as the 10-year still threatens a break above 3.0%," said Morrison.

In an interview with Bloomberg on Thursday, US Treasury Secretary Steven Mnuchin dismissed concerns about rising wages, saying they won’t necessarily prompt a rise in inflation.

“There are a lot of ways to have the economy grow...You can have wage inflation and not necessarily have inflation concerns in general,” he said.

With this in mind, speeches from New York Fed President William Dudley, Boston Fed President Eric Rosengren, Cleveland Fed President Loretta Mester and San Francisco Fed President John Williams will be closely watched.

On the corporate front, US food company General Mills made a move into the pet food market as it agreed to buy Blue Buffalo for $40 per share in cash, which is around $8bn. Blue Buffalo shares surged in pre-market trade.

Chemical company Albermarle was likely to be in focus as it hiked its quarterly dividend by 5% to 33.50 cents a share.