* HP jumps after raising 2013 outlook
* China manufacturing data shows contraction
* Futures off: Dow 128 pts, S&P 15.8 pts, Nasdaq 22.5 pts
By Chuck Mikolajczak
NEW YORK, May 23 U.S. stocks were set for a
lower open on Thursday, with the S&P 500 on track for its first
back-to-back daily drop in a month, amid investor concerns the
U.S. Federal Reserve's stimulus may be scaled back sooner than
hoped and over weak data in China.
The S&P 500 posted its biggest decline in three weeks
on Wednesday, after minutes from the latest U.S. Federal Reserve
meeting showed some officials were open to tapering large-scale
asset purchases as early as at the June meeting.
The minutes came in the wake of comments earlier in the
session by Fed Chairman Ben Bernanke, who said the Fed could
scale back the pace of its bond purchases at one of the "next
few meetings" if the economic recovery looked set to maintain
Adding to selling pressure, China's flash HSBC Purchasing
Managers' Index for May fell to 49.6, slipping under the
50-point level which indicates expansion for the first time
since October. That raised concerns the recovery in the world's
second-largest economy has stalled and a sharper downturn may be
on the horizon.
"We are kind of in a situation where all news is bad news in
a way when the Fed starts to talk," said Peter Jankovskis,
co-chief investment officer at OakBrook Investments LLC in
"They are pretty well maxed out...so you are kind of here
waiting on the end game."
Separately, data in Europe showed that while the downturn
across euro zone businesses eased slightly in May, the bloc's
economy is likely to contract again in the second quarter.
In a bright spot, the number of Americans filing new claims
for unemployment benefits dropped 23,000 to a seasonally
adjusted 340,000, slightly better than expectations for a
decline to 345,000, a report showed.
But U.S. manufacturing slowed for a second straight month in
May, as the Markit Purchasing Managers Index fell to a
seven-month low of 51.9 in May from 52.1 the previous month.
The benchmark S&P index has jumped 16.1 percent since the
start of the year, boosted by slowly improving U.S. economic
data and stimulus measures by central banks around the globe.
S&P 500 futures dropped 15.8 points and were below
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 lost 128
points, and Nasdaq 100 futures slumped 22.5 points.
Later in the session at 10:00 a.m. EDT (1400 GMT), housing
market data will be released, in the form of the Federal Housing
Finance Agency's home price index for March and new home sales
Economists in a Reuters survey forecast new home sales to
show a total of 425,000 annualized units compared with 417,000
Hewlett-Packard Co jumped 10.5 percent to $23.45 in
premarket trade after the computer maker raised its 2013
earnings outlook after quarterly results beat low expectations.
Ralph Lauren Corp shares fell 3.8 percent to $181
before the opening bell after the fashion company reported sales
that fell below its own projections.
Hormel Foods Corp reported a lower quarterly profit
due to costs related to its Skippy acquisition, and higher grain
costs and lower turkey meat prices at its Jennie-O Turkey