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 In a speech late Thursday, Bernanke said persistently tight credit conditions, the housing slump and high energy prices will probably create some "headwinds for the consumer in the months ahead." Although he expects the U.S. can withstand the problems without slipping into recession, Bernanke also said he expects consumers could become more cautious.
The central bank will have to be "exceptionally alert and flexible," Bernanke said.
Investors were likely to read the commitment to flexibility as a sign the bank is willing to lower interest rates again, after cutting rates at the past two meetings. The Fed meets again on Dec. 11.
There was more reassuring news for the troubled mortgage market on Friday: The Wall Street Journal reported the White House and the mortgage industry are nearing a pact that would temporarily freeze interest rates on some subprime home loans. Defaults on such loans have resulted in big losses for financial institutions worldwide.
Economic data due Friday include readings on inflation, personal income and spending and construction spending.
Futures gained momentum ahead of the start to trading on Wall Street. Dow Jones industrials futures advanced 141, or 1.10 percent, to 13,474, while Standard & Poor's 500 index futures rose 16.80, or 1.14 percent, to 1,488.20, and Nasdaq 100 index futures added 26.25, or 1.25 percent, to 2,126.75.
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 The Dow has piled on about 568 points over the past three sessions as investors
-- now more confident that credit woes could ebb -- pulled the blue chip index back from the edge of a downward correction. On Monday, the Dow's 240-point slide was enough to bring the index to a level that was down 10 percent from its October high.
Bond prices fell. The yield on the benchmark 10-year Treasury note rose to 3.95 percent from 3.94 percent late Thursday.
In corporate news, jewelry and luxury goods retailer Tiffany & Co. said third-quarter profit more than tripled on strong sales growth and a gain on the sale of its Tokyo flagship store. The results fell short of Wall Street's forecast, but Tiffany also lifted its profit outlook for fiscal 2007.
Meanwhile, oil prices slipped below the $90 a barrel mark. Light, sweet crude fell $1.51 to $89.50 a barrel in premarket trading on the New York Mercantile Exchange.
Gold edged lower as the dollar dipped against other world currencies.
Overseas markets made gains. Britain's FTSE 100 rose 1.04 percent; Germany's DAX index rose 1.50 percent and France's CAC-40 rose 1.15 percent. In Asia, Japan's Nikkei stock average closed up 1.08 percent. Hong Kong's Hang Seng index rose 0.57 percent.
[Associated Press; By LAUREN VILLAGRAN]
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