By Tomi Kilgore
U.S. stock futures declined early Tuesday, as investors took
some time to digest the market's recent string of record high
closes.
About 90 minutes ahead of the open, Dow Jones Industrial Average
futures shed 36 points, or 0.2%, to 16686.
S&P 500 index futures lost five points, or 0.3%, to 1917 and
Nasdaq-100 futures fell 12 points, or 0.3%, to 3715. Changes in
stock futures don't always accurately predict stock moves after the
opening bell.
On Monday, the S&P 500 closed up 0.1% at a third straight
record and fifth in six sessions. The Dow rose 0.2% to post a
second-straight record. The slow grind higher continued, as overall
volume fell to the third-lowest daily total of the year.
Small-capitalization stocks have come under renewed pressure, as
the Russell 2000 fell for a second-straight session on Monday. The
small-cap index closed Monday 6.6% below its May 4 record closing
high.
The pressure continued on Tuesday, with the iShares Russell 2000
exchange-traded fund falling 0.6% in premarket trading.
"The market seems to be a little complacent, as we're making new
highs on a daily basis," said Peter Cardillo, chief market
economist at broker-dealer Rockwell Global Capital. "The market
does need to take a rest."
He said the underperformance by small-cap stocks doesn't worry
him, "because we're not seeing a market engaged in an overly
speculative rise." Because the economic data continues to show the
economy is headed for stronger growth, Mr. Cardillo said, "the
market isn't overly expensive in terms of fundamentals."
On the economic calendar, factory orders for April are expected
to rise 0.6% on the month. But the highlight of the week is the
closely watched monthly employment report due on Friday, which is
expected to show that 210,000 jobs were added in May.
The yield on the 10-year Treasury note ticked up to 2.556% from
2.532% late Monday.
Gold futures gained 0.2% to $1,246.90 an ounce, after settling
lower for a sixth-straight session on Monday. Crude-oil futures
declined 0.1% to $102.41 a barrel. The dollar lost some ground
against the euro and the yen.
European markets pulled back, with the Stoxx Europe 600 down
0.6% after closing Monday at a 6 1/2-year high. Investors digested
data showing the annual rate of inflation in the euro zone fell to
0.5% in May, the lowest level in more than four years and well
below the European Central Bank's target of nearly 2%. The data
helped cement expectations that the ECB will introduce more
stimulus when it meets on Thursday.
The euro zone's unemployment rate fell to 11.7% in April, the
lowest level since October 2012, from 11.8% in March.
Asian markets were mixed. Japan's Nikkei Stock Average rose 0.7%
to a two-month high, while China's Shanghai Composite eased less
than 0.1%.
In corporate news, Quiksilver tumbled 38% after the apparel
retailer reported late Monday a wider-than-expected fiscal
second-quarter loss and revenue that fell more than forecast. The
company also said general sales trends of recent quarters would
continue in the second half of 2014.
Hillshire Brands rallied 8.5% after the company said it would
hold separate talks with Pilgrim's Pride and Tyson Foods, who have
both offered to buy Hillshire. The announcement comes after The
Wall Street Journal reported late Monday that Pilgrim's Pride
raised its bid to buy Hillshire to $55 a share, above Tyson's offer
of $50 a share.
Hillshire added that it wasn't withdrawing or modifying its own
bid to buy Pinnacle Foods, which was trading down 0.6% early
Tuesday.
Dow component AT&T advanced 0.5% after the company raised
its 2014 revenue growth outlook and affirmed its adjusted earnings
estimate, and said that it has seen smartphone sales rise through
the current quarter.
Krispy Kreme slumped 12% after the doughnut chain matched fiscal
first-quarter earnings expectations, but lowered its outlook for
the year.
Write to Tomi Kilgore at tomi.kilgore@wsj.com