June 28 (Reuters) - Wall Street's main stock indexes were poised for a higher open on Friday as a report closely watched by the Federal Reserve showed inflation moderating in line with expectations, strengthening hopes for early interest rate cuts this year.
The Commerce Department's data showed personal consumption expenditures (PCE) price index - the Fed's preferred inflation gauge - was unchanged on a monthly basis in May and rose 2.6% annually, all along expectations.
Excluding the volatile food and energy components, the core figure increased 0.1% month-on-month and 2.6% annually.
Chances of a rate cut in September inched up to 68% from 61% before the data, as per LSEG FedWatch data.
"This is a perfect report - it gives the Fed the green light to cut in September, and sets the stage for the dovish rhetoric to continue, which we will hopefully hear in the July meeting. It shows the Fed measures are working and keeps a soft landing still on table," said Jay Woods, chief global strategist at Freedom Capital Markets.
Even in the face of the Fed guiding for just one interest rate cut this year in December, market participants have stuck to their bets of two cuts starting September, hoping for a sustained downtrend in inflation and as the economy remains susceptible to decades-high interest rate.
Megacaps including Apple <AAPL.O>, Nvidia (NVDA.O), and Amazon.com (AMZN.O), rose between 0.6% and 1% in premarket trading.
Futures tracking the small-cap Russell 2000 rose 1% to an over two week-high.
At 8:43 a.m. ET, Dow e-minis were up 16 points, or 0.04%, S&P 500 e-minis were up 15 points, or 0.27%, and Nasdaq 100 e-minis were up 71 points, or 0.35%.
Richmond Fed President Thomas Barkin said he still wanted to proceed "deliberately" on policy. Comments from Fed official Michelle Bowman is also expected during the day.
Investors also geared up for the final reconstitution of the Russell benchmark indexes during the day, with the furious rally in AI-related stocks expected to leave an outsized imprint on their final shape.
Both the S&P 500 and the Nasdaq were set for gains in a week marked by a short-lived rout in AI-related stocks, Amazon.com hitting $2 trillion market value for the first time, quarterly earnings from the likes of FedEx (FDX.N), and Micron Technology (MU.O), opens new tab, and a mixed bag of economic data.
The two indexes were set for quarterly gains. However the blue-chip Dow (.DJI), opens new tab was on pace to end the quarter down 1%, highlighting the divergence between the more tech-heavy indexes and the rest of the market.
Trump Media & Technology Group (DJT.O), and other stocks linked to former President Donald Trump such as Phunware (PHUN.O), and Rumble (RUM.O), opens new tab rose between 1% and 8%.
On Thursday, President Joe Biden delivered a shaky, halting performance while rival Trump battered him with a series of often false attacks at their debate. The U.S. dollar jumped briefly during the debate, while benchmark Treasury yields inched higher.
Among others, Nike (NKE.N), opens new tab slumped 15.4% after forecasting a surprise drop in fiscal 2025 revenue.
Optical networking gear maker Infinera (INFN.O), jumped 18.3% after Nokia (NOKIA.HE), said it would acquire the company in a $2.3 billion deal.
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru; Editing by Maju Samuel
