U.S. stocks headed for a sharply lower open on Monday as a resurgent U.S. dollar drove a pullback in the price of oil and other commodities, while a broker downgrade hurt shares of Wal-Mart Stores Inc .

Data showing that manufacturing in New York state shrank in June at a more severe rate than expected presented an additional headwind for stock investors eager for more signs that the recession is abating.

Shares of energy, mining and other natural resource companies were likely to be among the top drags. Before the bell, the Select Sector SPDR Energy ETF shed 1.5 percent.

A decline on Wall Street would extend a global sell-off that tripped equity markets in Asia overnight and had European stocks falling about 2 percent as the appetite for riskier assets ebbed.

We have a stronger dollar, and that's putting pressure on commodities, and that's weighing on the market early on, said Peter Cardillo, chief market economist at Avalon Partners in New York.

S&P 500 futures slipped 10.70 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 shed 99 points, while Nasdaq 100 futures declined 13.25 points.

Goldman Sachs cut its rating on Wal-Mart to neutral from buy, saying it did not see a lot of positive catalysts to drive shares higher in the near-term as expense pressures and tougher sales comparisons persist.

Shares of Wal-Mart, a Dow component, fell 1.2 percent to $49.24 before the bell. On the energy front, shares of ConocoPhillips declined 1.6 percent to $43.65 before the bell, while Chevron lost 1.3 percent to $71.75.

The New York Federal Reserve's Empire State general business conditions index fell to minus 9.41 in June from minus 4.55 in May. Economists polled by Reuters had expected a June reading of minus 4.5.

The headline is obviously worse than expected, but the survey had spiked higher in April and May, so some modest giveback is to be expected, said Dan Greenhaus, market analyst at Miller Tabak & Co in New York.

While the recent run-up in commodities helped equities add to their recovery from the 12-year lows of early March, there has also been concern that a continued surge in commodity prices would stoke inflation pressures and hamper an economic recovery.

Even if the pullback weighs on the market, some investors might see it as a bit of a relief, more so after oil topped $73 a barrel last week. Higher energy costs are a drag on consumer spending and corporate profitability.

U.S. front-month crude declined 42 cents to $71.62 a barrel, but traders kept a close watch on OPEC member Iran, where contested election results sparked a weekend of violent protests. Since its March 9 low, the benchmark S&P 500 has risen about 40 percent.

(Additional reporting by Ryan Vlastelica, editing by Padraic Cassidy)