Indications: U.S. stock futures drop after retail sales

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By Steve Goldstein & Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures tossed off tentative gains Friday after retail sales disappointed and with a consumer confidence report still ahead.

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Stock futures turned lower after the Commerce Department estimated U.S. retail sales in May fell 1.2% after a seven-month string of gains. Read about surprising results.

Up 7 points before retail report, futures for the Dow Jones Industrial Average were off 40 points at 10,106.00.

S&P 500 futures fell 4.5 points to 1,075.00, while Nasdaq 100 futures declined 6.75 points to 1,814.25.

The May retail sales report "on the surface was not good," said Peter Boockvar, equity strategist at Miller Tabak, who noted the details are less dreary.

The report's biggest swing factor was building materials, sales of which fell 9.3% in May from the prior month, after two months of strong gains, Boockvar noted.

"If you take out gasoline and building materials, sales rose 0.1%, thus the headline looks messy but looking under the hood it's not as bad as it seems."

On a day when Goldman Sachs Group traded at a 52-week low, U.S. stocks rallied hard Thursday, with the S&P 500 climbing 2.95% in the third-biggest one-day gain of the year and the Dow Jones Industrial Average re-taking the 10,000 mark.

A bounce back for BP shares, a "sanguine" European Central Bank press conference, solid overseas economic data and a successful Spanish bond auction contributed to the gains, according to Jim Reid, a strategist at Deutsche Bank.

Later data will bring the first reading of June consumer confidence.

In China, consumer-level inflation grew at a stronger-than-forecast 3.1% clip in May.

Of companies in the spotlight, Novartis /quotes/comstock/13*!nvs/quotes/nls/nvs (NVS 48.36, +0.91, +1.92%) may be active after an advisory committee recommended approval of a multiple sclerosis drug designed to compete with Biogen Idec's /quotes/comstock/15*!biib/quotes/nls/biib (BIIB 46.73, -1.41, -2.93%) Avonex.

The euro /quotes/comstock/21o!x:seurusd (CUR_EURUSD 1.2113, +0.0007, +0.0578%) edged lower to $1.2105 after its big advance Thursday. European stocks were stronger in early afternoon trade, with the Stoxx Europe 600 rising 0.6%, led by Spanish banks including Banco Santander /quotes/comstock/13*!std/quotes/nls/std (STD 10.49, +0.58, +5.87%) . Spain's IBEX-35 rose as much as 4% at one point. The Nikkei 225 climbed 1.7% in Tokyo.

Oil futures slipped under the $75 per barrel mark.

Steve Goldstein is MarketWatch's London bureau chief. Kate Gibson is a reporter for MarketWatch, based in New York.