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US inflation rises moderately in June

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Russell 2000 futures jump

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Deckers, Baker Hughes ( BKR ) climb after results

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Dexcom ( DXCM ) slips after cutting revenue forecast

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Futures up: Dow 0.54%, S&P 500 0.71%, Nasdaq 0.93%

(Updated at 8:48 a.m. ET/1248 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

July 26 (Reuters) -

Wall Street's main indexes were poised for a strong opening

on Friday, with the Nasdaq taking the lead as megacap tech and

chip stocks recovered from the week's pummeling and a largely

in-line key inflation reading kept rate-cut bets intact.

Data showed the Personal Consumption Expenditures Price

Index, the U.S. Federal Reserve's preferred inflation metric,

rose 0.1% on a monthly basis in June and 2.5% annually, both as

expected.

Core PCE, which excludes the volatile food and energy

components, increased 0.2% monthly and 2.6% on an annual basis,

both slightly above estimates.

The moderate rise in

U.S. prices

underscored an improving inflation environment, potentially

positioning the Fed to begin easing policy in September.

"You've got a pretty nice (inflation) report here that

further emboldens the soft landing narrative," said Rick

Meckler, partner at Cherry Lane Investments.

Bets of a 25-basis-point cut by the Fed's September

meeting edged up to 91.5%, from 88% before the data, according

to CME's FedWatch. Traders largely expect around two rate cuts

by December, according to LSEG data.

All the so-called Magnificent Seven stocks - Apple ( AAPL )

, Nvidia ( NVDA ), Alphabet, Microsoft ( MSFT )

, Meta Platforms ( META ), Amazon.com ( AMZN ) and Tesla

- were up between 0.6% and 3.5% in premarket trading.

The 10-year Treasury yield turned lower after

the PCE data.

Chip stocks also rebounded, with Intel ( INTC ),

Broadcom ( AVGO ), Qualcomm ( QCOM ), Micron Technology ( MU )

and Arm Holdings up between 1.4% and 3.4%.

At 8:48 a.m. ET, Dow e-minis were up 219 points, or

0.54%, S&P 500 e-minis were up 38.75 points, or 0.71%,

and Nasdaq 100 e-minis were up 177 points, or 0.93%.

Investors have dumped tech stocks over the past few weeks,

with disappointing earnings from Alphabet and Tesla sparking a

sharp sell-off in megacap and artificial-intelligence-linked

shares on Wednesday. The S&P 500 and the Nasdaq were on track

for a second straight weekly decline if losses hold.

"While it's been a rough week for the S&P and the

Nasdaq, the rotation in the small caps and cyclicals has

continued to have a much better week," Meckler said.

Concerns about Wall Street's growing dependence on a set of

high-momentum stocks, whose valuations now appear inflated, have

made underperforming sectors like mid- and small-cap stocks seem

more attractive on the prospect of early rate cuts.

Futures tracking the Russell 2000 jumped 1.2% on

the day, with the small-cap index set for its third straight

week of gains if trends hold.

Data released earlier this week showed faster-than-expected

second-quarter economic growth and subsiding inflationary

pressures, keeping hopes of a September rate cut alive and

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

.

Deckers Outdoor ( DECK ) jumped 13.1% after raising its

annual profit forecast, while Oilfield services firm Baker

Hughes ( BKR ) climbed 3.1% after beating estimates for

second-quarter profit.

Medical device maker Dexcom ( DXCM ) slumped 38.3% after

cutting its annual revenue forecast.