Stocks set for setback

NEW YORK (CNNMoney.com) -- U.S. stocks are set to open lower Thursday, with futures turning around after China tightened the amount of capital available in the country.

At 8:43 a.m. ET, Nasdaq and S&P futures were lower, reversing gains from earlier in the morning.

In an effort to cool an overheated investment climate, for the seventh time this year the Chinese central bank raised the amount of money commercial banks need to keep in reserve.

The move effectively reduces the amount of capital available for investment, and could slow economic growth.

Also overseas, both the European Central Bank and Bank of England kept interest rates steady. There was speculation that the ECB might boost rates.

Overshadowed was some positive news on the retail front.

Wal-Mart (Charts, Fortune 500) said same store sales rose 3.1 percent lat month, beating estimates of 1 to 2 percent growth.

August same-store sales, the closely watched reports that track sales at stores open at least a year, began rolling in Wednesday, and will continue throughout Thursday morning.

Overall, analysts expect same store sales to rise 2.5 percent, well below the 3.9 percent gain they posted in August 2006.

Of the 23 retailers that had reported their results so far, 73 percent of retailers beat August sales estimates, while 27 percent missed analysts' forecasts. Top of page.

Some economic news at 8:30 a.m. ET moved futures off their lows, but couldn't bring them out of negative territory.

A revised reading on second quarter productivity came in at 2.6 percent, slightly higher than the 2.4 percent expected and up from the 1.8 percent reported in the preliminary reading. The inflation component of that survey also came in within estimates.

And jobless claims fell by 19,000 to 318,000 last week, a bigger drop than expected. Analysts were looking for 330,000 claims last week.

The markets slumped Wednesday after a weak report on private sector employment, a record drop in pending home sales, and a Federal Reserve report that made a rate cut later this month not seem so certain.

Market action may be limited Thursday as investors await Friday's monthly jobs report. Analysts are looking for employers to have added 110,000 jobs in August, up from 92,000 in July, according to estimates from Briefing.com.

In corporate news, Cisco Systems (Charts, Fortune 500) said late Wednesday that it's on track to meet its financial targets, which the Internet gear maker raised earlier this year.

Countrywide Financial (Charts, Fortune 500), the mortgage company hit by fallout in the subprime market, said late Wednesday it will cut another 900 employees, primarily from its mortgage unit. The cuts follow the elimination of about 500 positions last month.

And PC maker Hewlett-Packard (Charts, Fortune 500) unveiled two new "smart" cell phones late Wednesday, expanding further into the booming mobile phone market.

Overseas, European markets were higher while exchanges in Asia were mixed.

Oil prices rose 65 cents to $76.38 a barrel in early electronic trade amid expectations of a decline in inventories in the U.S. The inventory report is set for release at 10:30 a.m. ET.

Treasuries fell, lifting the yield on the benchmark note to 4.47 percent from 4.46 late Wednesday. Bond prices and yields move in opposite directions.

The dollar was mixed, falling against the euro but rising on the yen.