Stock futures fall on heightened correction worries

The recent slide has dragged the S&P 500 index 8.4 percent lower from its 2010 closing high on April 23 and pushed the benchmark index into negative territory for the year on Wednesday.

The euro fell one percent briefly against the dollar to hit the day's lows, tracking stocks lower as concerns grew about policy disarray in the euro zone.

The uncertainty in Europe has caused the dollar to strengthen against the euro and diverted attention from a solid quarter of corporate results in the United States.

Right now, obviously the good corporate news is not having much of an effect on the market, said Peter Cardillo, chief market economist at Avalon Partners in New York. It is all about the technical aspect at this time, and the strengthening of the dollar, which has cut investors appetite for risk.

S&P 500 futures fell 17 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 dropped 145 points, and Nasdaq 100 futures shed 33.25 points.

After the closing bell on Wednesday, Applied Materials Inc , the world's largest producer of chipmaking gear, posted a second-quarter profit as customers added capacity to take advantage of growing demand for consumer electronics, especially in emerging markets.

Top U.S. office products retailer Staples Inc gave a lackluster outlook for the rest of its fiscal year, assuming only a modest U.S. economic recovery.

Sears Holdings Corp's first-quarter profit slipped 38 percent, hit by weaker margins and slightly higher costs.

Other companies set to post earnings on Thursday include Gamestop Corp. Ross Stores , Salesforce.com , Intuit , Computer Sciences Corp. , and Compuware Corp. .

Data on tap for Thursday includes weekly claims for jobless benefits, as well as for the Conference Board's report on April leading economic indicators and the Philadelphia Federal Reserve's gauge of manufacturing activity in the U.S. mid-Atlantic region.

Financial stocks will garner attention after a setback for the Obama administration on Wednesday, as Senate Democrats failed to muster enough votes to end debate on the biggest overhaul of financial regulation since the 1930s, forcing another vote.

May individual equity options and some options on stock indexes stop trading at Friday's close and expire on Saturday, which may increase volatility.

European stocks fell late on Thursday morning on persistent concerns that other European countries may follow Germany's footsteps to ban short-selling in some financial instruments, traders said.

Worries over the euro zone's debt crisis hammered Asian stocks to their lowest in more than eight months.

U.S. stocks fell on Wednesday as Germany's unilateral action to ban specific trades on some stocks and bonds sparked a fresh wave of uncertainty and risk aversion among anxious investors.

(Reporting by Chuck Mikolajczak; Editing by Padraic Cassidy)