U.S. stocks ended modestly higher Friday, wounding up a week of solid gains as investors braced for the third-quarter financial results.  Sentiments also got a boost after Federal Reserve Chairman Ben Bernanke indicated that the central bank will be ready to tighten monetary policy once the economy improves.  Bernanke’s tightening comments helped the dollar regain some lost ground.  Bond prices fell sharply. 

After a two-week selloff, fueled in part by concerns that the seven-month old rally had gotten ahead of any economic recovery, stocks got a boost last week following better-than-estimated economic numbers and Alcoa’s (NYSE:AA) surprise quarterly profit.  That helped investors set aside worries and extend the rally.  Meanwhile, White House economic adviser Lawrence Summers reiterated the Obama administration’s commitment to a strong dollar, citing recent comments by U.S. Treasury Secretary Timothy Geithner.

This morning’s stock futures show markets are headed for a higher opening as the busy

U.S. stocks dropped moderately, reversing earlier gains in the final hour of trading as concern grew that efforts to lift the economy out of stagnation will be withdrawn prematurely.  Stocks got some boost following the central bank’s widely-expected decision to hold interest rates steady but the rally faded soon after as traders found few surprising revelations in the Fed statement.

Although the Fed, in its policy statement, contended that it would continue to employ a wide range of tools to stimulate the economy, investors saw little reason to rejoice, wondering if the stocks were too expensive at current levels.  The Fed reiterated that it will slow its purchase of mortgage-backed securities, signaling its confidence that an economic recovery is indeed underway.  However, there was no talk of exit strategy methods and timetables.  Nevertheless, the FOMC minutes, released at 2:15 ET, maintained the Fed's intentions to keep "exceptionally low levels