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Futures off: Dow 0.24%, S&P 500 0.26%, Nasdaq 0.45%

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Court hearing of Fed's Cook scheduled for 10 a.m. ET

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US reports solid July consumer spending

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Dell, Marvell ( MRVL ) fall after dour quarterly forecasts

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Caterpillar ( CAT ) falls after forecasting bigger 2025 tariff hit

(Updates to before markets open)

By Johann M Cherian and Sanchayaita Roy

Aug 29 (Reuters) - U.S. stock index futures pared losses

on Friday after a largely in-line inflation report did little to

change expectations of an interest rate cut at the Federal

Reserve's meeting next month.

A Commerce Department report showed the Fed's preferred

inflation gauge, the Personal Consumption Expenditures Price

Index, rose 2.6% in July as expected on an annual basis - above

the 2% target of the central bank.

Excluding volatile items such as food and energy, the index

rose 2.9%, in line with expectations but suggesting U.S. tariffs

on imports were starting to reflect in the prices of some goods.

The U.S. tariff exemption for package imports valued under

$800 also ended on Friday, raising costs for businesses and, in

turn, consumers.

Traders are still pricing in an 84.2% chance of the central

bank lowering interest rates by 25 basis points in September,

according to data compiled by LSEG, based on Chair Jerome

Powell's dovish comments at Jackson Hole where he acknowledged

labor market weakness.

Yields on short-term Treasury bonds

also slipped after the data.

"The numbers released today... leave the door wide open for

the Fed to go ahead and cut in their September 17 meeting," said

Art Hogan, chief market strategist at B Riley Wealth.

While underlying price pressures are increasing, the central

bank has most likely shifted its focus to shoring up the job

market and that will drive the decision-making over the course

of the next three meetings, Hogan said.

Next Friday's nonfarm payrolls report is now on the radar

for more insight on the labor market.

Governor Christopher Waller, a candidate for the central

bank's top job, on Thursday said he wants to start cutting rates

next month, in line with President Donald Trump's calls to lower

borrowing costs.

At 08:54 a.m. ET, Dow E-minis were down 109 points,

or 0.24%, S&P 500 E-minis were down 17 points, or 0.26%,

and Nasdaq 100 E-minis were down 106.75 points, or

0.45%.

Futures tracking the rate-sensitive small-caps Russell 2000

index pared declines and were last down 0.1%.

Nasdaq futures fell the most, with personal computer maker

Dell and chipmaker Marvell ( MRVL ) down 14.4% and 6.4%

after their quarterly forecasts missed expectations.

Nvidia ( NVDA ) lost nearly 1% in premarket trading, a day

after the AI chip leader's dour China market expectations jolted

investors accustomed to blockbuster forecasts from the company.

Still, strength in its overall results and bullish comments

from CEO Jensen Huang calmed worries of an imminent slowdown in

demand for artificial intelligence infrastructure, boosting

other AI-related stocks, megacaps and chip companies on

Thursday.

Attention this week was also on U.S. President Donald

Trump's tussle with the central bank.

Governor Lisa Cook filed a motion that declared Trump's

effort to fire her was unlawful and seeks to bar the Fed from

taking steps to remove her pending further litigation. A hearing

on the motion is due at 10 a.m. ET.

Among others, global economy bellwether Caterpillar ( CAT )

lost 2.4% after raising its annual estimate for tariff-related

costs.

Celsius Holdings ( CELH ) rose 6.9% after a report said

PepsiCo ( PEP ) was increasing its stake in the energy drink

maker through a $585 million deal.

(Reporting by Johann M Cherian and Sanchayaita Roy in

Bengaluru; Editing by Devika Syamnath)