Volatility in the US stock market hit a three-month high yesterday as the benchmark S&P 500 has shed 3% in the past two trading days. Equity futures have been drifting overnight and suggest a slight recovery this morning.

Two hours before the opening bell, the Dow looks to open 20 points higher at 10,854 while S&P 500 futures are up 2.75 points to 1,166.75. The 2 year Treasury note is unchanged yielding 0.865% and the benchmark 10 year note is up 2.7bps yielding 3.573%.

Light crude oil is off 0.20% to $79.81 per barrel, while gold is up 0.11% to $1,175.90.

Overseas, Greek headlines and the threat of contagion continue to dominate headlines. Japan’s Nikkei index, opening markets after some local holidays, sunk 3.3% to a two-month low today.

A flight to quality has helped the US dollar continue to strengthen, setting a fresh 14-month high against the euro.

In other news, Boston Fed president Eric Rosengren, a voter on the FOMC, said that while economic activity is accelerating, but the US is years away from attaining full employment.

Key Events Today:

8:30 ― Initial Jobless Claims are set to remain steady below the 450k mark in the final week of April, a pace that economists say indicates that there is national growth in the labor markets. Last week, the index fell 11k to 448k, marking the fourth time since September 2008 that weekly claims have been below 450k. Economists anticipate a 3k drop to 445k in this survey.

“We believe that businesses will continue cutting fewer jobs so that initial claims will continue on a gradual downtrend,” said economists from Nomura. “As further evidence that the job market may be improving, the total number of persons receiving jobless pay ― through either the regular 26-week program or the two extended benefit programs ― has been declining in recent weeks.”

8:30 ― The quarterly Productivity & Costs report should indicate the productivity continues to advance, but not at the same pace seen in the final quarter of last year. Economists look for a gain of 2.6% from January to March, versus the 6.9% gain in the prior quarter. Part of the reduction, however, means that employers are hiring people, thus causing productivity per workers to falter a bit. Meanwhile, unit labor costs should be cut 1.0% versus a 5.9% slashing in the prior quarter.

“Most of the cost-cutting, which is behind the recent productivity surge, has already taken place,” said analysts at IHS Global Insight. “Companies will be adding jobs going forward to meet growing demand. As a result, productivity growth should slow markedly this year. “

Economists at BBVA added that productivity has advanced for the past three quarters, as employers have been meeting increases in demand with current workers. “This trend is expected to continue in 1Q10, but at a slower pace because average non-farm payrolls rose in the first quarter. If employers continue to depend on labor productivity to meet demand, the employment situation will recover at a slow pace.”

9:30 ― Ben Bernanke, chairman of the Federal Reserve, speaks to the Chicago Fed‘s 46th Annual Conference on Bank Structure.