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Alphabet slips as OpenAI to launch search competitor

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Arm Holdings up on report of AI chips plan

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Futures up: S&P 500 0.19%, Nasdaq 100 0.28%, Dow 0.14%

(Updated at 8:25 a.m. ET/ 1225 GMT)

By Sruthi Shankar and Shristi Achar A

May 13 (Reuters) - U.S. stock indexes were set to open

higher on Monday, nearing record peaks following a recent run of

gains, with investors awaiting key inflation figures this week

to gauge the likelihood of interest rate cuts in 2024.

The S&P 500 and Nasdaq Composite on Friday

registered their third week of gains in a row for the first time

since January, while the Dow posted its biggest weekly

gain since mid-December.

The indexes were back near all-time highs hit in March,

boosted by stronger-than-expected earnings reports and signs of

a cooling labor market that fueled bets of one or two rate cuts

by the U.S. Federal Reserve this year.

"Not only is earnings coming better than anticipated, but

the outlook has been raised," said Thomas Hayes, chairman at

Great Hill Capital LLC.

"Market likes that but also needs to get some level of

comfort that inflation is not going back up and potentially

going down to give the Fed cover for at least one or maybe two

cuts before the end of the year."

The keenly awaited inflation data on Wednesday is expected

to show that core consumer prices rose 0.3% on a

month-over-month basis in April, for an annual rise of 3.6%,

according to economists forecasts in a Reuters poll.

Investors will also focus on a spate of economic readings

this week, including monthly producer prices, retail sales and

weekly jobless claims.

While Fed policymakers have reassured markets the next

policy move is not a rate rise, the timing of the first cut

remains uncertain. Cleveland Fed President Loretta Mester is

scheduled to speak later in the day.

Traders are currently pricing in rate cuts of 42 bps from

the Fed by the end of 2024, according to LSEG's rate

probabilities app, with odds for a September rate cut of at

least 25 bps at 63%.

Major companies reporting this week include Home Depot ( HD )

, Walmart ( WMT ), Cisco ( CSCO ) and Alibaba.

Of the 459 S&P 500 companies that reported through Friday,

77.3% beat analysts' profit estimates, according to LSEG data.

The long-term average is 66.7%.

By 8:25 a.m. ET, S&P 500 e-minis were up 9.75

points, or 0.19%. Nasdaq 100 e-minis climbed 50 points,

or 0.28%, and Dow e-minis added 57 points, or 0.14%

Alphabet slipped nearly 2% premarket as

Microsoft ( MSFT )-backed OpenAI looked set to announce its artificial

intelligence (AI)-powered search product on Monday. Microsoft ( MSFT )

edged up 0.5%.

Arm Holdings climbed 3.4% after Nikkei Asia

reported the SoftBank Group-backed chip designer plans

to develop AI chips, seeking to launch the first products in

2025.

Meme stock GameStop ( GME ) soared 33% after social media

persona "Roaring Kitty", whose online posts helped spark the

2021 trading frenzy in the company's shares, posted his first

tweet on X after three years.

AMC Entertainment ( AMC ) jumped 13%.

Kenvue ( KVUE ) shed almost 1% after healthcare giant

Johnson & Johnson ( JNJ ) said it will offload its entire 9.5%

stake in the Tylenol maker.

(Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru;

Editing by Devika Syamnath)