US STOCKS-Wall St set for higher open as inflation eases; forecast boosts Micron

By Johann M Cherian and Shashwat Chauhan

Dec 18 (Reuters) - Wall Street's main indexes were set to open higher on Thursday after softer-than-expected inflation data boosted expectations for more interest rate cuts by the Federal Reserve, while chipmaker Micron's blowout forecast temporarily assuaged worries about tech sector valuations.

A Labor Department report showed the Consumer Price Index (CPI) rose 2.7% on an annual basis in November, lower than an estimated 3.1% rise, according to economists polled by Reuters.

The core figure, which excludes volatile food and energy components, rose 2.6% on an annual basis, compared with expectations for a 3.0% advance.

However, traders also looked for clues into whether the data could potentially be distorted by the recent government shutdown, similar to the official jobs report that was released earlier this week.

Another report showed jobless claims were 224,000 for the week ended December 13, broadly in line with estimates of 225,000.

"The Fed could look at the increase in the unemployment rate and the tame inflation reading as a reason to cut again. They’ll get some confirming or disconfirming evidence with the next releases before their January meeting," said Brian Jacobsen, chief economic strategist at Annex Wealth Management.

Traders added to expectations for a January rate cut after the data and are pricing in about 60 basis points worth of rate cuts next year, according to data compiled by LSEG.

Thursday's data comes at a time when inflation expectations have had traders price in rate hikes in other developed economies for next year, while they also scrutinized rate decisions out of the UK and Europe.

At 8:44 a.m. ET, Dow E-minis YMcv1 were up 262 points, or 0.55%, S&P 500 E-minis EScv1 were up 56.25 points, or 0.84% and Nasdaq 100 E-minis NQcv1 were up 351 points, or 1.42%.

Futures tracking the smallcap Russell 2000 RTYcv1 spiked 1.3%. Smallcap companies are particularly rate-sensitive.

A standout in premarket trading was Micron Technology MU.O, which rose 14.5% after forecasting quarterly profit at nearly double what analysts were expecting on strong artificial intelligence-related demand.

Other memory companies including SanDisk SNDK.O rose 9.1% and Western Digital WDC.O gained 5.8%, while chip giant Nvidia NVDA.O advanced 1.9%.

Investors were recoiling from a selloff on Wednesday when uncertainty over Oracle's ORCL.N funding plans for a Stargate data center sent the S&P 500 .SPX and the Nasdaq .IXIC to three-week lows. The cloud company's shares edged up 1.9% on Thursday.

Still, the reprieve from Micron's earnings is likely to be brief as traders scour for clarity on how corporates are monetizing AI.

The benchmark and tech-heavy indexes are now on track for their biggest two-week loss since tariff concerns sparked a rout in global markets between late March and early April.

Among others, Lululemon LULU.O gained 7.5% premarket as a report said activist investor Elliott has acquired more than a $1 billion stake in the athletic-wear company.

Birkenstock BIRK.N lost 9.5% after the footwear maker's annual profit forecast missed estimates.

Trump Media & Technology DJT.O jumped 27% after the company and fusion power company TAE Technologies said they have agreed to combine in an all-stock deal valued at more than $6 billion.

Investors will watch recently soaring cannabis companies as Trump is expected to address potential easing of marijuana regulations on Thursday. The AdvisorShares Pure U.S. Cannabis ETF MSOS.P was last up 7.3%.