* Futures down: Dow 0.15%, S&P 500 and Nasdaq flat

* Marvell Technology ( MRVL ) down after results

* Dollar Tree ( DLTR ), Best Buy ( BBY ) gain on upbeat forecast

* Drone firms rise on report Trump administration funding

talks

(Updates before market open)

By Twesha Dikshit and Utkarsh Hathi

May 28 (Reuters) - Wall Street's main indexes were set

to open flat on Thursday as escalating tensions between the U.S.

and Iran dampened hopes of an imminent peace deal, while

investors digested key inflation data.

Tehran targeted a U.S. airbase on Thursday after Washington

launched fresh strikes. The move came hours after President

Donald Trump rejected a report that he was close to a compromise

deal with Iran.

Oil prices jumped over 2%, while U.S. Treasury yields edged

higher with the continued closure of the Strait of Hormuz adding

to inflation worries.

Data showed U.S. inflation increased at its fastest pace in

three years in April, driven by higher energy prices amid the

Iran war.

"I don't think the data changed the narrative. The number

was not as bad as feared. That pushes back a little bit against

some expectations for rate hikes," said Angelo Kourkafas, senior

global investment strategist at Edward Jones.

"A lot of the focus will still be on the Iran negotiations

and the AI trends and these are the two things that (will) drive

the narrative for equities."

At 08:54 a.m. ET, Dow E-minis were down 75 points,

or 0.15%, S&P 500 E-minis were down 1 points, or 0.01%,

and Nasdaq 100 E-minis were up 16.5 points, or 0.05%.

AI OPTIMISM, EARNINGS GROWTH FUEL MARKET RALLY

Renewed confidence in AI and earnings growth momentum have

underscored the recent rally, with all three major indexes

closing at a record high on Wednesday.

The S&P 500 was on track for a ninth consecutive

weekly gain, its longest winning streak since December 2023.

Before the bell, Marvell Technology ( MRVL ) rose 4.6% after

first-quarter results. The company's shares have more than

doubled so far this year.

Snowflake soared 37% after the data analytics firm

lifted its annual product revenue forecast and announced a

five-year AI infrastructure deal worth $6 billion with Amazon

Web Services.

Peers Datadog ( DDOG ) , and MongoDB ( MDB ) rose 3.8% and

9.4%, respectively.

Dollar Tree ( DLTR ) climbed 17% after the discount retailer

lifted its full-year profit forecast, while Best Buy ( BBY )

added 20% after the electronics vendor forecast second-quarter

sales above estimates.

Kohl's gained 16.8% after the department store chain

posted quarterly sales in line with estimates, and stuck to its

annual targets.

Drone companies rose after the Wall Street Journal reported

that the Trump administration was in talks to fund drone firms.

Unusual Machines ( UMAC ) jumped 28.1% while AeroVironment ( AVAV )

and Kratos Defense & Security Solutions added

9.3% and 13.3%, respectively.

(Reporting by Twesha Dikshit and Utkarsh Hathi; Editing by

Joyjeet Das and Devika Syamnath)