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Traders add to Fed rate cut bets as inflation eases

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Trump-linked stocks jump after presidential debate

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Nike ( NKE ) slumps after results

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Infinera ( INFN ) rises after Nokia to buy company

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Futures up: Dow 0.04%, S&P 500 0.27%, Nasdaq 0.35%

(Updated at 8:43 a.m. ET/1243 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

June 28 (Reuters) -

Wall Street's main stock indexes were poised for a higher

open on Friday as a report closely watched by the Federal

Reserve showed inflation moderating in line with expectations,

strengthening hopes for early interest rate cuts this year.

The Commerce Department's data showed

personal consumption expenditures

(PCE) price index - the Fed's preferred inflation gauge -

was unchanged on a monthly basis in May and rose 2.6% annually,

all along expectations.

Excluding the volatile food and energy components, the

core figure increased 0.1% month-on-month and 2.6% annually.

Chances of a

rate cut in September

inched up to 68% from 61% before the data, as per LSEG

FedWatch data.

"This is a perfect report - it gives the Fed the green

light to cut in September, and sets the stage for the dovish

rhetoric to continue, which we will hopefully hear in the July

meeting. It shows the Fed measures are working and keeps a soft

landing still on table," said Jay Woods, chief global strategist

at Freedom Capital Markets.

Even in the face of the Fed guiding for just one interest

rate cut this year in December, market participants have stuck

to their bets of two cuts starting September, hoping for a

sustained downtrend in inflation and as the economy remains

susceptible to decades-high interest rate.

Megacaps including Apple, Nvidia ( NVDA ), and

Amazon.com ( AMZN ) rose between 0.6% and 1% in premarket

trading.

Futures tracking the small-cap Russell 2000

rose 1% to an over two week-high.

At 8:43 a.m. ET, Dow e-minis were up 16 points,

or 0.04%, S&P 500 e-minis were up 15 points, or 0.27%,

and Nasdaq 100 e-minis were up 71 points, or 0.35%.

Richmond Fed President

Thomas Barkin

said he still wanted to proceed "deliberately" on policy.

Comments from Fed official Michelle Bowman is also expected

during the day.

Investors also geared up for the final reconstitution of the

Russell benchmark indexes during the day, with the furious rally

in AI-related stocks expected to leave an outsized imprint on

their final shape.

Both the S&P 500 and the Nasdaq were set for gains in a

week marked by a short-lived rout in AI-related stocks,

Amazon.com ( AMZN ) hitting $2 trillion market value for the first time,

quarterly earnings from the likes of FedEx ( FDX ) and Micron

Technology ( MU ), and a mixed bag of economic data.

The two indexes were set for quarterly gains. However

the blue-chip Dow was on pace to end the quarter down 1%,

highlighting the divergence between the more tech-heavy indexes

and the rest of the market.

Trump Media & Technology Group ( DJT ) and other stocks

linked to former President Donald Trump such as Phunware ( PHUN )

and Rumble rose between 1% and 8%.

On Thursday, President Joe Biden delivered a shaky, halting

performance while rival Trump battered him with a series of

often false attacks at their debate. The U.S. dollar jumped

briefly during the debate, while benchmark Treasury yields

inched higher.

Among others, Nike ( NKE ) slumped 15.4% after forecasting a

surprise drop in fiscal 2025 revenue.

Optical networking gear maker Infinera ( INFN ) jumped

18.3% after Nokia said it would acquire the company

in a $2.3 billion deal.