By Shubham Batra and Shashwat Chauhan
(Reuters) - Futures tied to Wall Street's main indexes gained on Monday, rebounding from heavy losses last week, as investors remained optimistic about soft landing prospects for the U.S. economy ahead of a crucial inflation report later in the week.
All megacap stocks rose in premarket trading, with Tesla leading the gains, last up 1.7%.
Most chip stocks, which also saw heavy selling last week, were on the rise with AMD and Marvell Technology advancing 1% and 1.7%, respectively.
Global markets were rattled last week as uncertainty over the U.S. economy's health rippled across assets, adding fuel to an already volatile period that has investors grappling with a shift in the Federal Reserve's policy and worries over stretched valuations.
Friday's weaker-than-expected August jobs data spurred worries on economic growth and drove the Nasdaq Composite to its worst week since January 2022, while the S&P 500 saw its biggest weekly drop since March 2023.
For the year, S&P 500 still remains 13.4% higher as hopes of a soft landing for the U.S. economy remained alive with the Fed expected to begin its rate-cutting cycle next week.
"Today, the markets remain cautiously optimistic, reflecting hopes that rate cuts will avoid a downturn. Yet, if economic conditions worsen sharply, fears of a recession could outweigh the benefits of rate cuts," said Seema Shah, chief global strategist at Principal Asset Management.
"History shows that rate cuts themselves are not the enemy —it's the economic context in which they occur that investors should be paying close attention to."
Markets will be squarely focused on U.S. consumer prices data on Wednesday that is expected to show a moderation in headline inflation in August to 2.6% on a yearly basis, while on a monthly basis it is expected to remain unchanged at 0.2%.
This will be followed by producer prices data on Thursday.
Money markets currently see a 75% chance of a 25-basis-point rate reduction by the Fed next week and expect a total monetary easing of 100 bps by the end of the year, according to CME's FedWatch Tool.
Bank of America, the most conservative among Wall Street's brokerages on the size of the Fed's expected rate cuts this year, raised its forecast to match most of its peers' expectations of 25 bps of easing in each of the three remaining policy meetings this year.
At 7:00 a.m. ET, Dow E-minis were up 275 points, or 0.68%, S&P 500 E-minis were up 40 points, or 0.74% and Nasdaq 100 E-minis were up 156.25 points, or 0.85%.
On Tuesday, Democrat Kamala Harris and Republican Donald Trump will debate for the first time ahead of the presidential election on Nov. 5.
Among individual movers, Boeing advanced 4.7% after it reached a tentative agreement with a union representing more than 32,000 workers in the U.S. Pacific Northwest, in a deal that could help avert a possible crippling strike as early as Sept. 13.
Dell Technologies and Palantir rose 5.9% and 8% respectively, while Erie climbed 3% in low volumes as they are set to join the S&P 500 index on Sept. 23.
These companies will replace American Airlines Group, Etsy and Bio-Rad Laboratories, respectively, in the index.
(Reporting by Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)