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Futures up: Dow 0.45%, S&P 500 0.76%, Nasdaq 1.06%

July 26 (Reuters) - Nasdaq futures jumped 1% on Friday

as megacap tech and chip stocks bounced back after a drubbing

earlier this week, while investors hoped for a further let-up in

inflation in a crucial data release later in the day.

Megacap tech stocks including Apple ( AAPL ), Nvidia ( NVDA )

, Alphabet, Microsoft ( MSFT ), Meta Platforms ( META )

, Amazon.com ( AMZN ) and Tesla were up between

0.7% and 2.2% in premarket trading.

Chip stocks also rebounded, with Intel ( INTC ), Broadcom ( AVGO )

, Qualcomm ( QCOM ), Micron Technology ( MU ) and Arm

Holdings up around 2% each.

At 5:32 a.m. ET, Dow e-minis were up 182 points, or

0.45%, S&P 500 e-minis were up 41.25 points, or 0.76%,

and Nasdaq 100 e-minis were up 200.75 points, or 1.06%.

Investors have dumped megacap tech stocks in the past few

weeks, with disappointing earnings from Alphabet and Tesla

sparking a sharp selloff in the "Magnificent Seven" on

Wednesday. The setting up the S&P 500 and the Nasdaq for their

second straight weekly decline.

Concerns over Wall Street's growing dependence on the set of

high-momentum stocks, whose valuations now appear

over-stretched, have turned underperforming sectors like mid-

and small-cap stocks more alluring on rising prospects of early

Federal Reserve rate cuts.

The much-awaited personal consumption expenditures (PCE)

price index data - the Fed's preferred inflation gauge - will be

watched for signs of further cooling in inflation. Recent signs

of easing inflation and a weakening labor market have boosted

bets of an early start to interest rates cuts.

Traders have priced in around two rate cuts by December, as

per LSEG data, while bets of a 25-basis-point cut by the Fed's

September meeting stood at 88%, according to CME's FedWatch.

The Commerce Department's report, due at 8:30 a.m. ET, is

expected to show PCE rose 0.1% on a monthly basis in June after

last month's flat reading. Excluding volatile items like food

and energy, the core figure is seen increasing 0.1% after a

similar rise in May.

Earlier this week, data showing faster-than-expected

second-quarter economic growth and subsiding inflation pressures

left intact hopes of a September rate cut, boosting the

blue-chip Dow and the small-cap Russell 2000.

Futures tracking the Russell 2000 climbed 1.7% on

Friday.

On the earnings front, Deckers Outdoor ( DECK ) jumped 11.6%

after raising its annual profit forecast following a

first-quarter results beat.

Medical device maker Dexcom ( DXCM ) slumped 36% after

cutting its annual revenue forecast, while Oilfield services

firm Baker Hughes ( BKR ) climbed 2.1% after beating estimates

for second-quarter profit.

Investors also kept an eye out for the developments on the

U.S. Presidential race, with new opinion polls showing Vice

President Kamala Harris narrowing the gap with Republican rival

Donald Trump.

(Reporting by Ankika Biswas in Bengaluru; Editing by Saumyadeb

Chakrabarty)