US pre-open: Futures rally after Yellen's remarks

LONDON (ShareCast) - (ShareCast News) - US stock futures turned sharply north on Friday, after Federal Reserve chairwoman Janet Yellen said the economy was strengthening and a rate hike was likely this year. The Dow Jones Industrial Average is expected to open up approximately 211 points, while the S&P 500 and the Nasdaq (NasdaqGS: NDAQ - news) are set to begin the final session of the week 22 and 44 points higher respectively.

Yellen hints at liftoff Late on Thursday, Yellen said the US central bank will start raising interest rates in the coming months, indicating inflation pressures will gradually increase over the next couple of years.

"The Fed chair appeared to provide a bit of much needed clarity, claiming that he majority of the Federal Open Market Committee, including Yellen, expect a 2015 lift-off," said Spreadex's financial analyst Connor Campbell.

"This leaves the announcement of a rate-hike in October or December on the cards, providing the kind of future anchoring event for the markets they have been sorely lacking this week." Yellen's words might have provided a timely boost to the markets but changes in the economic landscape were not to be ruled out, warned Michael Hewson, chief market analyst at CMC Markets. "While markets appear to have taken comfort from the slightly clearer tone last night a lot can change between now and October and or December, and recent data does suggest that the Fed's timetable could well be blown off course," he said.

"Furthermore Yellen's assertion that inflation effects are short term and transitory doesn't bear up to the facts that commodity prices have been putting downward pressure on prices for over three years now.

"That's not transitory, that's a trend." Elsewhere, Asian stocks were mostly in the red as investors were worried by the prospect of a hike in interest rates in the US, while European stocks gained, partly because of Yellen's remarks.

The dollar climbed 0.47% against the yen and advanced 0.10% and 0.15% against the pound and the euro respectively, while gold futures shed 0.88% to $1,143.70.

Oil prices edged higher, with West Texas Intermediate gaining 0.60% to $45.18 a barrel, while Brent rose 0.17% to $48.25 a barrel.

Friday data On the economic data front, investors will analyse a third estimate for US second-quarter gross domestic product, which is released at 1330 BST.

A September report for consumer sentiment is on tap at 1500 BST, with economists forecasting a reading of 87.0.

In company news, Nike (Sao Paolo: NIKE34.SA - news) surged 8.11% in pre-market trading after delivering an upbeat quarterly earnings report on Thursday.

Ahead of the bell, BlackBerry (Swiss: BB.SW - news) posted a wider-than-expected adjusted loss in the second quarter. Shares (Berlin: DI6.BE - news) fell 3.27%.

Bed Bath & Beyond (NasdaqGS: BBBY - news) slid 0.85% ahead of the bell, after the group said late on Thursday that like-for-like sales missed estimates in the last quarter.