U.S. Stocks To Open Lower Ahead Of Data

NEW YORK (MarketWatch) -- U.S. stocks were set for a lower open on Tuesday, with investors consolidating some of the market's strong gains while keeping a cautious stance ahead of data on the service sector of the economy and possible comments from Federal Reserve Chairman Ben Bernanke.

Bernanke's speech, which was released earlier, was seen as balanced about risks to growth and inflation, failed to move stock futures much.

"There was nothing new there, which makes it seem that the Fed is going to stay on hold," said Peter Cardillo, chief market economist at Avalon Partners.

"This is basically a market that's consolidated," Cardillo said, "but it could all change if Bernanke indicates something else" while answering questions after his speech.

Futures for the Dow Jones Industrial Average were down 40 points to 13,638, while those for the S&P 500 index eased 5 points to 1,535.

Nasdaq 100 futures lost 6.75 points to 1,930.

Among blue chips, General Motors Corp. , Walt Disney Co. and DuPont , all due to make presentations to analysts, might move later in the session.

Dampening sentiment before the open, Bed Bath & Beyond fell 7% in electronic trade after the retailer issued its first-ever profit warning as a public company. Goldman Sachs downgraded the stock to neutral from buy.

Investor attention will now turn to the 10 a.m. release of the Institute of Supply Management's non-manufacturing index, which is expected to show the service sector fell slightly in May.

Shanghai recovers

"This market managed to shrug off China yesterday," Avalon's Cardillo said. "This market is doing its own thing with all the M&A still out there."

U.S. stocks ended Monday with a modest rise, overcoming a tumble in Shanghai-listed stocks, rising crude-oil prices.

Overnight, the Shanghai Composite lost 7% before recovering and closing on a 2.6% gain.

Treasury Secretary Henry Paulson is also due to be speaking on the U.S.-Chinese economic relationship, a topic of increased focus amid the gyrations of Chinese stock markets in the last week.

Yet more deals

Avaya gained 2.3% after agreeing, as rumored, to be bought by TPG Capital and Silver Lake Partners for $8.2 billion, or $17.50 a share in cash.

Amgen late Monday agreed to buy privately held Ilypsa for $420 million. For virtually the same amount of cash, Ericsson agreed to buy German billing software firm LHS.

By Nick Godt