Bernanke says Fed will tighten policy -- but not yet By Steve Goldstein, MarketWatch LONDON (MarketWatch) -- U.S. stock futures edged slightly lower Tuesday after recent gains, with the market awaiting a host of key earnings reports and digesting Federal Reserve Chairman Ben Bernanke's message that the central bank will move to curtain inflation -- but only when the economy is moving quickly enough to warrant tighter policy. S&P 500 futures slipped 1 point to 948.10 and Nasdaq 100 futures fell a half point to 1,540.00. Futures on the Dow Jones Industrial Average fell 13 points. An upgrade for Caterpillar ahead of its earnings report, an increased S&P 500 target from Goldman Sachs and relief that lender CIT Group was going to get rescued helped push U.S. stocks higher on Monday, with the Dow Jones Industrial Average rising 104 points, the S&P 500 rising 11 points and the Nasdaq Composite adding 23 points. Caterpillar (CAT 36.65, +2.66, +7.83%) , DuPont (DD 28.33, +0.76, +2.76%) , United Technologies (UTX 54.97, +1.17, +2.17%) and Coca-Cola (KO 51.03, +0.71, +1.41%) headline Tuesday's key reports, with tech darling Apple (AAPL 152.91, +1.16, +0.76%) and Internet search service Yahoo (YHOO 17.01, +0.17, +1.01%) reporting after the close of trade. Yahoo also will be in the spotlight after bringing forward a new home page ahead of schedule. Julian Pendock, chief investment officer of London-based Senhouse Capital, said the market isn't cheap at the moment, and said he's not preoccupied by the earnings reports. "Management guides everyone down to such a low level that they can beat by a few cents. It's just a meaningless exercise," he said. "But there's nothing to say markets can't trade higher as more money comes into the market and they trade at a higher multiple. Although we've got massive debt problems in the West, there's still a lot of cash sitting around as well." Federal Reserve Chairman Ben Bernanke took the surprise out of his testimony in front of Congress, due for 10 a.m. Eastern, saying in a Wall Street Journal op-ed that the Fed will act decisively to prevent excess money growth from stirring up inflation once the economy recovers. "The Federal Reserve has many effective tools to tighten monetary policy when the economic outlook requires us to do so," Bernanke wrote, detailing five specific steps it would take. "As my colleagues and I have stated, however, economic conditions are not likely to warrant tighter monetary policy for an extended period." Bernanke is scheduled to testify before the House Financial Services later Tuesday, delivering the semiannual report on the economy from the Federal Open Market Committee. He will repeat his testimony on Wednesday before the Senate Banking Committee. "Suspense [is] gone and speculation quelled that the Fed is planning to exit quantitative easing soon," said Kenneth Broux, economist at Lloyds TSB Corporate Markets, commenting on market action early Tuesday. Also on the central bank front, the Bank of Canada will make its interest rate decision. Of other companies in the spotlight, Texas Instruments (TXN 23.61, +0.60, +2.61%) reported a 56% profit fall for the second quarter, which wasn't as steep as analysts had forecast, and projected third-quarter earnings ahead of Wall Street estimates. TI shares have run up roughly 12% over the last five sessions ahead of those results. Boston Scientific (BSX 10.30, +0.26, +2.59%) and Legg Mason (LM 24.94, +0.73, +3.02%) may climb after well-received updates. In Hong Kong, the Hang Seng finished broadly unmoved while the Nikkei 225 climbed 2.7% in a catch-up rally after Monday's holiday. Stocks in Europe saw moderate rises, with the Stoxx 600 tacking on 0.6%. Oil futures edged 11 cents lower to $65.18 a barrel, and the dollar traded in a tight range against rivals.

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