Futures Pare Losses After Durable Goods

Futures shaved earlier losses Wednesday after durable goods orders jumped much more than expected in July, but still remained under pressure after Moody’s downgraded Japan’s economy by one notch on concerns over the size of the country’s budget deficit.

The agency had warned in May that it may downgrade Japan's Aa2 rating due to heightened concerns about its faltering growth prospects and a weak policy response to deal with a bulging public debt, now twice its $5 trillion GDP.

Many investors are still waiting on a speech by Federal Reserve Chairman Ben Bernanke on Friday at a banking conference in Jackson Hole, Wyoming, in the hope that he may announce some form of monetary policy to help support the U.S. economy.

Stocks closed near the day's highs in the previous session, with the Dow posting its biggest gain in almost two weeks, despite a 5.8-magnitude earthquake in Virginiathat shook parts of the U.S. East Coast and after investors shrugged off a handful of disappointing economic news.

On the economic front, durable goods orders jumped more than expected in July to 4 percent after a revised 1.3 percent drop in June, according to the Commerce Department. Economists were expecting orders to gain 2 percent, according to a Reuters poll.

Among earnings, Toll Brothers edged higher after the luxury homebuilder beat profit expectations, but the firm narrowed its home delivery outlook for the year as it expects the housing sector to remain in a tepid state.

BHP Billiton slipped after the global miner posted earnings below expectations. However' the firm announced a bigger-than-expected dividend.

Applied Materials and TiVo are slated to post earnings after-the-bell.

Also on the economic front, weekly mortgage applications slumped to almost a 15-year low last week as fears over the strength of the economy kept buyers at bay, according to the Mortgage Bankers Association.

Meanwhile in Europe, France is set to announce a new round of austerity measures at 12:00 pm ET, after figures earlier in the month showed that GDP growth slowed to zero in the second quarter. European shares were mixed.

Coming Up This Week:

WEDNESDAY: Oil inventories, 5-yr note auction; Earnings from Applied Materials, TiVo
THURSDAY: Weekly jobless claims, 7-yr note auction, Medtronic shareholders mtg, USDA food prices outlook; Earnings from Hormel, Pandora
FRIDAY: GDP, corproate profits, consumer sentiment, Bernanke speaks, short-sale bans expire; Earnings from Tiffany