* University of Michigan consumer sentiment data, leading indicators on tap
* J.C. Penney dips after earnings
* Kansas City Southern to join S&P 500
* Futures up: Dow 50 points, S&P 6.9 points, Nasdaq 11.25 points
By Chuck Mikolajczak
NEW YORK, May 17 (Reuters) - U.S. stocks were set for a higher open on Friday, putting the S&P 500 on track to rebound from its worst decline in nearly three weeks and on pace for its fourth straight weekly advance ahead of data on consumer sentiment.
The benchmark S&P index fell 0.5 percent in the prior session, its biggest decline since May 1, after a Federal Reserve official said the U.S. central bank could begin reducing its monetary stimulus program this summer.
The central bank's program of $85 billion a month in bonds has been a major driver of the rally in equities that has taken both the Dow and S&P 500 indexes to record highs and sent both indexes up about 16 percent for the year.
"The fact the Fed is starting to discuss pulling back on their repurchase program, that was just a little blip, investors are still hungry for equity based on Fed policy, macro conditions and the overall positive earnings season," said Gordon Charlop, managing director at Rosenblatt Securities in New York.
"The only concern you have is that because of the movement, because it's been so one-directional, that if there is some kind of galvanizing event and everybody tries to head for the exit doors it could be a little bit tight."
Data expected on Friday includes the Thomson Reuters/University of Michigan Surveys of Consumers preliminary May consumer sentiment index at 9:55 a.m. (1355 GMT). Economists in a Reuters survey expect a reading of 78.0 compared with 76.4 in the final April report.
At 10 a.m. (1400 GMT) the Conference Board is due to release its report on April leading economic indicators. Economists in a Reuters survey forecast a 0.2 percent rise compared with a 0.1 percent drop in March.
The stimulus measures taken by central banks around the globe have enabled investors to shrug off more recent economic data indicating only sluggish improvement in the U.S. economy.
S&P 500 futures rose 6.9 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 50 points, and Nasdaq 100 futures added 11.25 points.
J.C. Penney Co Inc shares lost 3.6 percent to $18.12 in premarket trade after the retailer reported another steep quarterly loss on weak sales and heavy clearance deals and Chief Executive Myron Ullman cautioned he needs time to fix the issues of the retailer.
General Motors Co advanced 1.6 percent to $32.90 in premarket trade after CLSA raised its rating on the automaker to "buy" from "underperform."
S&P Dow Jones Indices said after the close on Thursday that S&P MidCap 400 component Kansas City Southern will replace Dean Foods Co in the S&P 500.
Aruba Networks Inc plunged 21.6 percent before the opening bell after the network equipment maker released fourth-quarter results well below Wall Street expectations, hurt by rising competition from Cisco Systems Inc.