Pessimism reigned on Wall Street Thursday as yesterday's failure of nerve looked set to translate into a fourth straight day of humiliation for the bulls.

Index futures recently showed the

S&P 500

trading 6 points below fair value, while the Nasdaq 100 was set for a 15-point plunge. The 10-year Treasury note rose 7/32 in price to yield 4.99%, while the dollar rose against the yen and euro.

A move in the 10-year yield below the 5% fed funds rate has spurred fears of a recession in past sessions.

Crude oil swooned on news that Abu Musab al-Zarqawi, Iraq's top terrorist, was killed in a bombing north of Baghdad. In electronic Nymex trading, crude for July delivery was recently off 95 cents to $69.87 a barrel. Gold lost $10 to $622.60 an ounce, silver lost 30 cents to $11.59 an ounce, and copper fell 14 cents to $3.44 a pound.

Declines in commodity markets were previously taken as bullish for stocks, but not of late. During a week in which the

Dow

has shed 2.5%, the S&P 500 2.8% and the

Nasdaq Composite

3%, the Amex Oil Index is down 6% and the Philadelphia Oil Services Index has swooned 8.7%. Crude closed at $72.33 last Friday.

Overseas markets were sharply lower Thursday. In London, the FTSE 100 was recently off 1.8% to 5602 while Germany's Xetra DAX lost 2.1% to 5430. In Asia, Japan's Nikkei plunged 3.1% to 14,633 while Hong Kong's Hang Seng lost 2.3% to 15,450.

On Wednesday, a 75-point Dow rally came unglued late in the session and all the major averages ended with losses of about 0.6%. The Dow starts today's session from below 11,000 for the first time since March 10, while the Nasdaq is sitting at a seven-month low.

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

.

Behind the slide was more tough talk from a

Federal Reserve

official, Atlanta President Jack Guynn, who noted that policymakers are still waiting for energy prices to seep into core inflation. Guynn's warning built on the hawkish tone that began Monday when Ben Bernanke said inflation is "at or above" a preferred ceiling.

On the growth front, investors must Thursday digest a mixed message from consumer products titan

Procter & Gamble

(PG) - Get Report

, which affirmed an earnings outlook that suggests it will struggle to hit analysts' forecasts.

Late Wednesday, P&G repeated that it expects to earn 52 cents to 54 cents a share in the fourth quarter. The Thomson First Call consensus is for 54 cents a share. The company also reiterated a sales growth estimate of 20% to 24%. P&G shares are down more than 10% since early March on concerns about rising raw materials costs.

Chip-equipment maker

Novellus

(NVLS)

said late Wednesday that second-quarter earnings should be 37 cents to 40 cents a share, well above its old estimate of 26 cents to 28 cents a share. It cited better-than-expected sales and widening margins.

Tech bulls hope the outlook can breathe life back into the semiconductor sector, where

Texas Instruments

(TXN) - Get Report

is down 11%,

Applied Materials

(AMAT) - Get Report

has lost 12%, and

Intel

(INTC) - Get Report

is off 13% since the Fed's last rate announcement.

Texas Instruments will provide a midquarter update after the bell Thursday. Meanwhile Citigroup lowered its earnings estimate for Intel and

Advanced Micro

(AMD) - Get Report

for this year and 2007.

Other companies making investor presentations Thursday include

Halliburton

(HAL) - Get Report

and

Computer Associates

(CA) - Get Report

.

General Motors

(GM) - Get Report

reportedly is nearing a plan under which it and supplier Delphi will offer many of Delphi's workers buyout offers of up to $140,000. A deal could be announced next week, the

Wall Street Journal

says.