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Kellanova ( K ) jumps after Mars to buy co in $36 bln deal

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U.S. CPI rises as expected in July

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Futures: Dow flat, S&P 500 and Nasdaq up 0.1%

(Updated at 08:51 a.m. ET/1251 GMT)

By Medha Singh and Shashwat Chauhan

Aug 14 (Reuters) -

Wall Street was set for a muted open on Wednesday after data

showed inflation was moderating as expected, cementing wagers

that the U.S. Federal Reserve was on track to start its policy

easing cycle next month.

Futures were volatile after the Labor Department data showed

U.S. consumer prices rose 0.2% as expected in July, taking the

headline inflation to 2.9% year-on-year from 3% in June, below

economists' expectations of 3% growth.

Bets on rate cuts were largely unchanged after the data,

with traders almost evenly split between a 25 bps rate cut or a

more hefty 50 bps cut at the Fed's Sept. 17-18 meeting, as per

the CME FedWatch Tool.

"We don't know whether it's going to be 25 or 50, but I

don't think inflation's going to determine that. It's going to

be the growth-oriented economic statistics, particularly the

labor statistics and payrolls," said Jack McIntyre, portfolio

manager at Brandywine Global.

Both the S&P 500 and the Nasdaq clocked

their fourth straight session of gains on Tuesday following

softer-than-expected producer prices data that indicated

inflation continued to moderate, although it is yet to reach the

U.S. central bank's 2% target.

A rebound in megacap and technology stocks have helped

markets recoup most of their losses from a global market rout

earlier this month that was partly caused by data showing a

surge in U.S. unemployment rate in July.

Atlanta Federal Reserve President Raphael Bostic said on

Tuesday he wants to see "a little more data" before he's ready

to support lowering interest rates.

"We anticipate the Fed will cut rates in September,

primarily due to the rising unemployment rate and as a

precaution against a potential recession," said Stefan Koopman,

senior macro strategist at Rabobank.

At 8:51 a.m. ET, Dow E-minis were down 3

points, or 0.01%, S&P 500 E-minis were up 0.07% to 5,463 points

and Nasdaq 100 E-minis were up 17 points, or 0.09%.

The Cboe volatility index, Wall Street's fear gauge,

stayed below its long term average of 20 points for the second

day at 17.49 after hitting its highest since 2020 just last

week.

AI stocks Nvidia ( NVDA ), Super Micro and Dell

rose between 1.7% and 2.3% in premarket trading,

looking to continue their rally to the third straight session,

while other megacap and growth stocks edged lower.

Google-parent Alphabet slipped 1.1% after a

media report said the U.S. Department of Justice is considering

options that include breaking up the online search engine.

Kellanova ( K ) surged almost 7.4% after family-owned candy

giant Mars said it would buy the Cheez-It and Pringles maker in

a nearly $36 billion deal.

Cardinal Health ( CAH ) gained 6.3% after the drug

distributor raised its 2025 profit forecast.