U.S. stock futures edge up as investors await Yellen testimony

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[November 17, 2016]  By Tanya Agrawal

(Reuters) -
S&P 500 and Nasdaq futures were higher on Thursday while Dow futures were little changed, a day after the index broke a seven-day rally, as investors await Federal Reserve Chair Janet Yellen's congressional testimony.

U.S. stocks had been on a tear since Donald Trump's surprise victory in the Nov. 8 U.S. presidential election, with the Dow closing at a record level four days in a row.

The rally lost steam this week with investors seeking clarity on Trump's campaign promises and bracing for higher interest rates.

Trump's proposals to cut taxes and raise infrastructure spending are seen boosting economic activity and inflation, raising the possibility of more interest rate hikes. That sent the dollar index <.DXY> to a near 14-year high.

Yellen is scheduled to begin her testimony on the economic outlook before the congressional Joint Economic Committee at 10 a.m. ET.

A rate hike at the Fed's meeting next month is a foregone conclusion, according to several analysts. Traders are pricing in a 79 percent chance that the Fed will raise rates in December, according to Thomson Reuters data.

"Most Fed officials are in favor of 25 basis points hike in December, and markets are almost certain that the Fed will pull the trigger in their next meeting," said Hussein Sayed, chief market strategist at FXTM.

"Markets are more interested in Yellen's view on the economic effects of Trump's proposed fiscal policies," he said.

Philadelphia Fed President Patrick Harker said on Wednesday that the central bank might have to hike rates more aggressively if the incoming administration enacts a fiscal stimulus.
 

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. November 16, 2016. REUTERS/Brendan McDermid

Investors will also keep an eye on economic data scheduled to be released on Thursday, including the consumer price index for October that likely increased 0.4 percent after rising 0.3 percent in September. That data is expected at 8:30 a.m. ET.

Other data includes weekly jobless claims and housing starts numbers for October.

Cisco fell 3.8 percent to $30.37 in premarket trading after its current-quarter forecast fell below analysts' estimates.

Wal-Mart Stores fell 1 percent to $70.61 after the world's largest retailer reported lower-than-expected quarterly comparable sales.

NetApp jumped 10.9 percent to $38.50 after the data storage equipment maker's third-quarter profit forecast came in above estimates.

(Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)

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