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Futures down: Dow 0.31%, S&P 500 0.32%, Nasdaq 0.36%

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Producer inflation rises more than expected in July

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Markets reduce Fed rate cut expectations for 2025

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Deere, Tapestry flag strains from US tariffs

(Updates to before markets open)

By Johann M Cherian and Sanchayaita Roy

Aug 14 (Reuters) - Wall Street's main indexes were on

track to open lower on Thursday, after a hotter-than-expected

producer prices report dampened investor expectations of

potential interest-rate cuts by the Federal Reserve this year.

A Labor Department report showed the Producer Price Index

rose 3.3% on an annual basis in July, higher than the 2.5% gain

expected by economists polled by Reuters. On a monthly basis, it

rose 0.9%, compared with an estimated 0.2% rise.

Traders now expect the central bank to lower rates by about

58 basis points through the rest of the year, according to data

compiled by LSEG, compared with around 63 bps before the data.

But they are still fully pricing in a

quarter-percentage-point cut in September.

"It's sending a mixed message about the economy," said Peter

Andersen, founder of Andersen Capital Management in Boston.

"We have been too anxious to draw a conclusion that the

economy is fine, it's not overheated. But this wholesale data

does show that perhaps there is some inflation working and we

shouldn't be so quick to conclude that we need to cut interest

rates."

Recent data reflecting labor market weakness and a moderate

rise in consumer prices had strengthened expectations that the

central bank will potentially lower interest rates next month.

However, Thursday's report fanned concerns that U.S. tariffs

on imports could start to reflect on prices in the coming months

and could dampen a rally in U.S. stocks that had helped the

benchmark S&P 500 and tech-heavy Nasdaq log

record highs over the past two sessions.

At 08:52 a.m. ET, Dow E-minis were down 141 points,

or 0.31%, S&P 500 E-minis were down 20.5 points, or

0.32%, and Nasdaq 100 E-minis were down 87.25 points, or

0.36%.

Futures tracking the rate-sensitive small-cap Russell 200

index lost 1.2%.

Investors also assessed separate data that showed the number

of Americans filing new applications for unemployment benefits

came in at 224,000 for the week ended August 9, compared with

estimates of 228,000.

A report also showed San Francisco Fed President Mary Daly

pushed back against the need for a 50-basis-point interest rate

cut next month, a day after Treasury Secretary Scott Bessent

said an aggressive half-point cut was possible.

Wall Street's recovery from April lows has also elevated

valuations of the S&P 500 beyond long-term averages, aided by

better-than-expected earnings from megacap companies and more

clarity on trade deals.

Cisco Systems ( CSCO ) forecast first-quarter revenue above

estimates, driven by the artificial intelligence boom. However,

its shares were down 2% in premarket trading.

Deere & Co ( DE ) fell 6.5% after the farm-equipment maker

reported a lower quarterly profit and tightened its annual

profit forecast, while Tapestry plunged 12% after the

Coach handbag maker forecast annual profit below estimates.

Both companies warned of tariffs impacting their business.

Later in the day, investors will also tune into remarks from

St. Louis Fed President Alberto Musalem, a Federal Open Market

Committee voting member this year.