* Futures up: Dow 1.1%, S&P 500 0.85%, Nasdaq 1.36%

* Airlines and cruise operators climb; energy stocks lead

losses

* Fed decision due on Wednesday

* Investors await earnings from 'Mag 7' companies

(Updates before markets open)

By Johann M Cherian and Ragini Mathur

July 27 (Reuters) - Wall Street's main indexes were set to

open higher on Monday after the United States and Iran paused

hostilities, boosting risk appetite ahead of a week of major

earnings, economic data and an interest rate decision.

A wide swathe of stocks sensitive to energy prices rose in

premarket trading. United Airlines and Southwest

Airlines ( LUV ) were up 3.6% each. Cruise operators Royal

Caribbean and Carnival rose 2.4% and 3%,

respectively.

A 6.8% slide in Brent Crude prices to $90.1 a barrel

weighed on shares of energy companies. Occidental Petroleum ( OXY )

and Exxon Mobil were down about 3% each.

Markets ended last week rattled by escalating Middle East

tensions, on worries that the conflict could fuel further price

pressures ahead of the Fed's monetary policy decision due on

Wednesday.

Despite the announcement of the pause in attacks, shipping

through the crucial Strait of Hormuz remained low. Attacks by

Yemen's Iran-aligned Houthis on Saudi oil installations along

the Red Sea coast, another waterway vital to the global oil

trade, also kept traders on edge.

The Fed has offered few clues on monetary policy outlook

since Kevin Warsh took over as chair. Investors expect rates to

be left unchanged this week, but are pricing in at least 25

basis points worth of rate hikes later this year, LSEG-compiled

data showed.

"The Fed is not going to move this week. It would be

difficult to justify a hike based on a short-term spike in oil

prices," said Thomas Hayes, chairman at Great Hill Capital.

The Personal Consumption Expenditures Price Index for June

is due a day after the central bank's decision. The Fed's

preferred inflation gauge will likely play a key role in shaping

market expectations for interest rates later this year.

At 8:38 a.m. ET, Dow E-minis were up 571 points,

or 1.1%, and S&P 500 E-minis were up 63.5 points,

or 0.85%. Nasdaq 100 E-minis were up 383.75 points,

or 1.36%.

Futures tracking the interest-rate-sensitive Russell 2000

small-cap index rose 1%, while the CBOE Volatility

Index dipped 0.8 points to 17.77.

Earnings from 'Magnificent Seven' companies Microsoft ( MSFT )

, Amazon.com ( AMZN ), Meta and Apple ( AAPL )

will test the AI trade further this week.

Microsoft ( MSFT ), Amazon ( AMZN ) and Meta were up over 1% each, while Apple ( AAPL )

edged up 0.3%. Among chip stocks, Applied Materials ( AMAT )

gained 3.1%, Western Digital ( WDC ) added 2.3% and industry

leader Nvidia ( NVDA ) rose 0.7%.

Negative cash-flow reports from Alphabet and Tesla

last week added to concerns about debt-fueled corporate

spending. Chinese chipmaker CXMT Corp's stellar

debut also signaled intensifying competition for the U.S.

semiconductor industry.

"This is a very big week. It could determine whether

hyperscalers or semiconductors and memory stocks outperform for

the remainder of the year," Hayes said.

The tech-heavy Nasdaq is down 8% from its record

high, while earlier this month the Philadelphia SE Semiconductor

Index confirmed it has been in "bear market" territory

since late June.

An index closing 10% below its most recent high is called a

technical correction, while a 20% drop is referred to as a bear

market.

(Reporting by Johann M Cherian and Ragini Mathur in Bengaluru;

Editing by Saumyadeb Chakrabarty and Joyjeet Das)