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PDD Holdings ( PDD ) slumps after quarterly revenue miss

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BJ's Wholesale Club gains after rating upgrade

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Futures up: Dow 0.12%, S&P 500 0.16%, Nasdaq 0.03%

(Updated at 07:21 a.m. ET/1121 GMT)

By Johann M Cherian and Purvi Agarwal

Aug 26 (Reuters) - U.S. stock index futures inched

higher on Monday, with the markets focused on results from

AI-darling Nvidia ( NVDA ) and a key inflation report due later in the

week, while investors remained optimistic about a September rate

cut from the central bank.

Markets welcomed Federal Reserve Chair Jerome Powell's

comments on Friday, when he said "the time has come" to lower

borrowing costs in the light of diminishing upside risk to

inflation and moderating labor demand.

The main indexes rallied more than 1% in the previous

session, with the S&P 500 and the Dow less than 1%

from their respective record highs. Rate-sensitive small caps

logged their strongest day in six week as equities

continued to pare losses from the early-August market rout.

Traders are now betting on either a 25-basis-point or a

50-basis-point rate cut in September. Odds of the former have

dropped to 63.5% from more than 70% in the previous week, while

odds of a 50-bps cut have risen to 36.5% from about 30% last

week, according to the CME Group's Fed Watch tool.

"Employment data of late has been weak... as the inflation

side seems to be under control, the developments in the

employment leg will determine the size of the cuts," said Ipek

Ozkardeskaya, senior analyst at Swissquote Bank.

Attention will turn to the gross domestic product estimates

for the second quarter along with July Personal Consumption

Expenditure data, the central bank's preferred inflation gauge,

due later in the week.

At 7:21 a.m. ET, Dow e-minis were up 49 points, or

0.12%, S&P 500 e-minis were up 9.25 points, or 0.16%,

and Nasdaq 100 e-minis were up 5 points, or 0.03%.

As earnings season draws to a close, chip designer Nvidia ( NVDA )

, whose results are scheduled on Wednesday, traded

nearly 1% higher in premarket trading.

Markets have been less forgiving this quarter of highly

valued megacap stocks, which spearheaded the excitement around

artificial intelligence.

They will scrutinize Nvidia's ( NVDA ) earnings to justify the

stock's more than 160% year-to-date jump, which pushed its

market cap value to No. 2, just below that of Apple ( AAPL ), as

of Friday's close.

"The expectations remain sky-high. Nvidia ( NVDA ) cannot afford any

missteps at current valuations. Everything from the numbers to

guidance should be perfect to the keep the rally going,"

Ozkardeskaya said.

Results from Dell, Salesforce ( CRM ), Dollar

General ( DG ) and Gap are also awaited through the

week.

Comments from San Francisco Fed President Mary Daly, a

Federal Open Market Committee voting member this year, are due

later in the day.

With the geopolitical tensions in the Middle East in the

spotlight, crude prices climbed over 1%.

Among others, U.S.-listed shares of China's PDD Holdings

sank 14.9% after the Temu-owner missed market

expectations for second-quarter revenue.

BJ's Wholesale Club rose 1.0% after brokerage

J.P.Morgan lifted its rating on the club operator to "neutral"

from "underweight".

B Riley Financial ( RILY ) dropped 1.9% after the lender

announced a notification of delinquency with the Nasdaq.