June Could Start Badly for Stocks

Index futures point to early weakness.
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A new month brought no relief for bulls early Thursday as stocks were poised to slide ahead of key readings on manufacturing, real estate and consumer spending.

Index futures recently showed the

S&P 500

trading 3 points below fair value, while the Nasdaq 100 was set for a 5-point decline. The 10-year Treasury bond fell 1/32 in price to yield 5.13%, while the dollar rose against the yen and euro.

The direction of stocks, bonds and currency reflected Wednesday's

Federal Reserve

minutes, which depicted a marginal uptick in hawkish sentiment at last month's FOMC meeting. Traders interpreted the minutes as raising the possibility of another quarter-point rate hike when the Fed next meets on June 28 and 29.

"A number of factors were augmenting the upside risks to inflation: the surge in energy and commodity prices, some recent weakness in the foreign exchange value of the dollar, and the possibility that the apparent increase in inflation expectations could, if it persisted, impart momentum to inflation," the May 10 minutes read.

The policymakers' concern didn't keep buyers away from stocks on the last day of May. For Wednesday, the

Dow Jones Industrial Average

gained 74 points, or 0.7%, to 11,168, while the S&P 500 added 10 points, or 0.8%, to 1270. The

Nasdaq Composite

gained 14 points, or 0.7%, to 2179.

Still, May turned out badly for bulls, with the Dow's 1.7% decline making it the worst month since last June. The S&P 500 shed 3.1% on the month while the Nasdaq lost 6.2%; both were the worst monthly percentage declines for the indices since 2004.

Overseas markets were mostly lower Thursday, with London's FTSE 100 down 0.5% to 5635 and Germany's Xetra DAX off 1% to 5635. In Asia, Japan's Nikkei rose 0.2% overnight to 15,503, while Hong Kong's Hang Seng tumbled 1.3% to 15,645.

To view Ana Dane's video take on today's premarket action, click here

.

Oil eased as traders marked the first day of hurricane season in the U.S. July crude, which lost more than 1% Wednesday as the U.S. set terms for nuclear talks with Iran, fell another 44 cents to $70.85 a barrel Thursday. A report from the Energy Department later is expected to show U.S. crude and gasoline inventories rose last week.

On the economic slate Thursday is the Institute for Supply Management's manufacturing index for May, expected to decline slightly to 55.7. A report on construction spending is expected to show a 0.1% expansion last month. A reading on first-quarter productivity is expected to be revised upward to 3.9%, from 3.2%.

Another set of indicators is chain-store sales numbers for May, which will pour in throughout the morning. Early results have been uneven, with

American Eagle

(AEOS)

reporting a better-than-expected 11% rise in April comps, while

Aeropostale

(ARO)

saw an unexpected decline.

Pier 1

(PIR) - Get Report

reported its fourth straight monthly decline in same-store sales. Comps fell 6.6% from a year ago and the company reiterated guidance for a wide loss in the first quarter.

Away from retail,

Hovnanian

(HOV) - Get Report

said second-quarter earnings fell slightly from last year to $101 million, or $1.55 a share. The results beat estimates and the company reiterated its full-year profit guidance.

Novell

(NOVL)

earned $3.34 million, or a penny a share, in its fiscal third quarter, while adjusted earnings of 3 cents a share matched estimates. The software outfit issued fourth-quarter guidance that was a penny light.

Sun Microsystems

(SUNW) - Get Report

said late Wednesday that it will cut up to 5,000 workers in an effort to spur profitability. The server maker expects the layoffs and other initiatives to results in up to $590 million in annual savings.