* Futures down: Dow 32 pts, S&P 4.5 pts, Nasdaq 10.25 pts
By Yashaswini Swamynathan
May 19 (Reuters) - U.S. stock index futures were lower on Thursday as investors digested the possibility of the Federal Reserve raising interest rates as early as next month.
* Minutes from the Fed's April meeting, released on Wednesday, caught the market by surprise as they showed that most policymakers thought a June rate hike was appropriate, given continued improvement in the U.S. economy.
* Fed Vice Chair Stanley Fischer is expected to speak at a conference at 9:15 a.m. ET (1315 GMT) in New York, while New York Fed president William Dudley will speak at 10:30 a.m. ET.
* Wall Street pared gains in volatile trading and closed flat on Wednesday after Fed officials said they were more confident that inflation was rising and were less concerned about a global economic slowdown.
* Following the release of the minutes on Wednesday, traders were projecting a 34 percent chance of the central bank raising rates in June, up from 15 percent on Tuesday, according to the CME FedWatch tool.
* The dollar index jumped to a two-month high of 95.33 against a basket of major currencies.
* Investors looking for clues on the health of the U.S. retail sector will parse quarterly earnings results from companies such as Gap, Ross Stores and Dick's Sporting.
* Initial jobless claims are expected to have fallen by 19,000 to 275,000 for the week ended May 14. The data is expected at 8:30 a.m. ET (1230 GMT).
* Oil prices dropped more than 2 percent, falling for the second straight day on speculation of a rate hike and as U.S. inventories recorded an unexpected increase.
* Cisco Systems' shares were up 5.6 percent at $28.22 in premarket trading after the network equipment maker reported better-than-expected results.
* Dow-component Wal-Mart jumped 7.2 percent to $67.70 after the retailer reported better-than-expected sales.
* Tesla was down 0.7 percent at $209.50 after the carmaker said it would sell shares worth $1.7 billion to fund the production of its Model 3 electric sedans.
* Monsanto was up 7.8 percent at $104.50 after disclosing German group Bayer has made an unsolicited takeover proposal.
Futures snapshot at 7:06 a.m. ET:
* S&P 500 e-minis were down 4.5 points, or 0.22 percent, with 159,321 contracts traded.
* Nasdaq 100 e-minis were down 10.25 points, or 0.24 percent, on volume of 20,305 contracts.
* Dow e-minis were down 32 points, or 0.18 percent, with 25,189 contracts changing hands. (Reporting by Yashaswini Swamynathan; Editing by Don Sebastian)