Wall St set for higher open, bucking global downdraft; ISM on tap

Wall Street was set for a higher open on Monday, rebounding from Friday's sharp selloff as expectations for weak US manufacturing data eased some worries that the Federal Reserve may end its monetary stimulus earlier than expected - a concern that has been weighing on the market for the past week.

The day's major US economic news includes the Institute for Supply Management's Purchasing Managers Index for the manufacturing sector for May due at 10:00 a.m. ET (1400 GMT). Analysts in a Reuters survey expect a reading of 50.7, unchanged from April, with a reading above 50 indicating growth.

Echoing the tone, a separate report by financial data firm Markit showed US manufacturing picked up slightly in May, though the pace was sluggish and suggested the sector may be a drag on the US economy in the second quarter.

Also on tap is construction spending data for April at 10:00 a.m. ET, expected to show an increase of 0.8%, up from a 1.7% decline in March.

"The ISM data is expected to be consistent with the sluggish growth we have been seeing in the sector, which eases concerns that the Fed is going to change its stimulus program," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"This is going to be another week of volatile trading with ongoing guessing games on what the Fed might or might not do."

In a week of heavy data, the most important will be the May nonfarm payrolls report, scheduled for Friday. Reuters' survey of analysts shows an expected 170,000 jobs added, slightly higher than the previous 165,000.

The Fed's Beige Book survey of regional conditions is on tap for Wednesday.

Trading has been volatile for the past week with intraday swings of 1% up or down on concerns that the Fed may reduce its monetary stimulus earlier than expected.

Markets in Asia and Europe were rattled by data showing China's economy losing steam last month, with factory activity shrinking for the first time in seven months and cooler growth in services.

European markets, however, erased losses to trade positive ahead of US market open, helped by gains in miners.

S&P 500 futures rose 5 points and were above 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 gained 66 points and Nasdaq 100 futures added 4.5 points.

The S&P 500 has posted consecutive weekly losses for the first time since November as investors were willing to take some money off the table after a seven-month run of gains.

In company news, a long-running fight comes to a head on Monday when court proceedings begin over an $8.5 billion settlement between Bank of America Corp and investors in mortgage securities that turned sour in the financial crisis. Bank of America shares were up 1% in premarket trade.

Apple Inc goes to trial Monday over allegations by federal and state authorities that it conspired with publishers to raise the price of e-books. The stock was up 0.5% in premarket trade.

A Merck & Co drug designed to unmask tumor cells and mobilize the immune system to fight cancer helped shrink tumors in 38% of patients with advanced melanoma in an early-stage study, US researchers said on Sunday. The stock rose more than 4% in premarket trade.