Wall Street to open slightly lower after choppy session

NEW YORK (Reuters) - U.S. stocks were set for a modestly lower open on Wednesday, a day after stocks staged an intraday rally to erase a decline of nearly 1.3 percent and close out trading nearly flat.

Stocks shook off worries about global weakness and political turmoil in Greece on Tuesday to erase sharp declines early in the session as energy and technology shares rose.

Energy shares will likely be in focus again, as Brent crude dropped below $66 a barrel to trade just above a five-year low on supply concerns. Oil prices have been under pressure from the dollar's strength and OPEC's decision against an output cut, with Brent down more than 40 percent from its June high.

The S&P Energy sector <.SPNY> is the worst performing of the 10 major S&P sectors for the year and the only group in negative territory. Falling oil prices have raised concerns about earnings for energy companies, with year-end tax selling bringing additional pressure on the group.

After climbing to its most recent record high on Friday, the S&P 500 <.SPX> has slipped 0.7 percent and is up 10.6 percent from its October low.

"Valuations are on the high side of fair. They are not outrageous, and certainly by virtue of comparison there is an argument to be made about being overweight U.S. equities," said Eric Weigand, senior portfolio manager at the Private Client Reserve of U.S. Bank in New York.

"Certainly, we are still seeing favorable profitability on the part of corporations - they have been coming through this while investors have been kind of loath to embrace or celebrate the bull market."

S&P 500 e-mini futures were down 4.5 points and fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract, indicated a modestly lower open. Dow Jones industrial average e-mini futures <1YMc1> fell 39 points and Nasdaq 100 e-mini futures lost 5 points.

Costco Wholesale Corp rose 1.1 percent to $144.60 in premarket trade after it reported a better-than-expected quarterly profit as increased promotions helped the warehouse club operator deal with fierce competition.

Toll Brothers lost 0.9 percent to $34.48 before the opening bell after the homebuilder posted its quarterly results.

Yum Brands Inc lowered its profit forecast for the year for the second time, hurt by slower-than-expected sales recovery in China following a food safety scare in July. Its shares slumped 5.1 percent to $71.38 in premarket.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)

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