U.S. stock index futures edged higher on Wednesday ahead of keenly awaited consumer prices data, which will allow investors to determine if inflation is peaking and help calibrate their expectations on future interest rate hikes.
The report, due at 8:30 a.m. ET, is expected to show that prices rose at a much slower pace in July due to a sharp drop in the cost of gasoline, even though food inflation is expected to remain elevated.
Economists polled by Reuters expect the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Fed's target of 2%, but lower than last month's 9.1%.
But, core inflation is seen rising to 6.1% from 5.9%, showing that underlying inflation pressures are high.
After a rough start to the year, the benchmark S&P 500 is up near 13% from its mid-June low, largely on expectations the Federal Reserve will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.
The strong jobs report last week, however, raised the stakes for the inflation numbers that are shaping up as a key test for the summer rally in equities.
The market is pricing in a 67.5% chance of a 75 basis point increase in fund rates at the Fed's next meeting in September.
At 6:50 a.m. ET, Dow e-minis were up 56 points, or 0.17%, S&P 500 e-minis were up 6.75 points, or 0.16%, and Nasdaq 100 e-minis were up 18.75 points, or 0.14%.
Megacap growth and technology stocks edged up, with Tesla Inc gaining 1.8% in premarket trading after Chief Executive Elon Musk sold $6.9 billion worth of company's shares.
He said the funds could be used to finance a potential Twitter deal if he loses a legal battle. Twitter's shares rose 3.5%.
Meta Platforms Inc added 0.5% after the Facebook-parent said on Tuesday it raised $10 billion in its first-ever bond offering.
Coinbase Global Inc fell 6.1% after it reported a larger-than-expected quarterly loss as investors, worried by the rout in risky assets, shied away from trading in cryptocurrencies.
(Reporting by Bansari Mayur Kamdar and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur)