(Reuters) - U.S. stock index futures edged higher on Monday, with investors focused mainly on results from AI-favorite Nvidia and a key inflation report due later in the week, while confidence in a September interest-rate cut by the central bank remained high.
Markets lauded Federal Reserve Chair Jerome Powell's comments on Friday, when he said "the time has come" to lower borrowing costs in the light of diminishing upside risk to inflation and moderating labor demand.
The main indexes rallied more than 1% in the previous session, with the S&P 500 and the Dow less than 1% from their respective record highs. Rate-sensitive small caps logged their strongest day in six week, as equities continued to pare losses from the early August market rout.
Traders are now betting on a 25-basis-point or 50-basis-point rate cut in September. Odds of the former have dropped to 63.5%, from more than 70% in the previous week, while odds of a 50-bps cut have risen to 36.5%, from about 30% last week, according to the CME Group's Fed Watch tool.
Attention will turn to Friday's July Personal Consumption Expenditure data, the central bank's preferred inflation gauge.
At 05:28 a.m., Dow E-minis were up 15 points, or 0.04%, S&P 500 E-minis were up 9.25 points, or 0.16%, and Nasdaq 100 E-minis were up 47.75 points, or 0.24%.
As earnings season draws to a close, chip designer Nvidia, whose results are scheduled on Wednesday, traded nearly 1% higher in premarket trading.
Markets have been less forgiving this quarter of highly valued megacap stocks, which spearheaded the excitement around artificial intelligence.
They will scrutinize Nvidia's earnings to justify the stock's more than 160% year-to-date jump, which pushed its market cap value to No. 2, just below that of Apple, as of Friday's close.
Results from Dell, Salesforce, Dollar General and Gap are also awaited through the week.
Comments from San Francisco Fed President Mary Daly, a Federal Open Market Committee voting member this year, are due later in the day.
With the geopolitical tensions in the Middle East in the spotlight, crude prices climbed over 1%.
Among others, BJ's Wholesale Club rose 1.4% after brokerage J.P.Morgan lifted its rating on the club operator to "neutral" from "underweight".
B Riley Financial dropped 1.8% after the lender announced a notification of delinquency with the Nasdaq.
(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)