Stocks were set for a significant decline early Tuesday as

Wal-Mart's

(WMT) - Get Report

anemic sales forecast and a falling dollar outweighed a post-holiday flurry of mergers news.

Index futures recently showed the

S&P 500

trading 7 points below fair value, while the Nasdaq 100 was set for a 14-point fall. The 10-year Treasury bond fell 5/32 in price to yield 5.07, while the dollar fell against the yen and euro.

Overseas markets were lower, with London's FTSE 100 recently down 1.2% to 5721 and Germany's Xetra DAX off 1.3% to 5683. In Asia, Japan's Nikkei shed 0.4% overnight to 15,859, while Hong Kong's Hang Seng lost 0.7% to 15,858. Most overseas markets also fell on Monday, when U.S. trading was closed for Memorial Day.

The declines come a day after Wal-Mart said same-store sales should rise 2.3% in May, toward the low end of its previous range. Wal-Mart cited high gasoline prices and reported that shoppers are concentrating their purchases around payday, suggesting that savings are running thin.

Word of spending constraints comes as the Conference Board prepares to release its consumer confidence index for May. It's expected to fall to 101 from 109.2 a month earlier. Later this week, investors will see minutes from the last

Fed

meeting on Wednesday and the May employment report on Friday.

Stocks rose last week, bouncing from some of their lowest levels of the year as traders found bargains after a two-week selloff. Still, since peaking around May 10, the

Dow Jones Industrial Average

is down 3.8%, the S&P 500 has lost 3.5% and the

Nasdaq Composite

has plunged 6.4%.

Commodity prices were firm Tuesday, with gold adding 60 cents to $651.60 an ounce and July crude gaining 48 cents to $71.85 a barrel. Oil traders are eying an OPEC meeting in Venezuela this week where ministers are widely expected to leave currently record-high production quotas in place.

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

.

In mergers news Tuesday,

Kinder Morgan

(KMP)

is weighing an offer from the pipeline company's top executives to buy out public shareholders for $100 a share. The proposal values outstanding stock 18% higher than its Friday close.

Chemicals concern

Engelhard

(EC) - Get Report

reportedly plans to accept a $39-a-share buyout offer from Germany's BASF. Engelhard resisted BASF for six months but will concede as early as today after finding no viable counter offers.

European telecom

Vodafone

(VOD) - Get Report

reported a $41 billion loss for its latest fiscal year Tuesday, citing writeoffs in Germany and Italy. On a continuing operations basis, the loss was slightly narrower than expected, and the company raised its targeted dividend and buyback program for 2006 by 50%.

Several brokerages made significant changes to their stock recommendations early Tuesday. Deutsche Bank cut its rating on

General Motors

(GM) - Get Report

to sell from hold, citing its recent runup. Two upgrades lifted GM shares 14% last week.

Sun Microsystems

(SUNW) - Get Report

went to buy from neutral at UBS;

Wyeth

( WYE) went to neutral from buy at Merrill Lynch; and

Sirius

(SIRI) - Get Report

went to overweight from neutral at Lehman Brothers.