US STOCKS-Wall St set for muted open as markets assess softer-than-expected inflation data

By Twesha Dikshit and Purvi Agarwal

Feb 13 (Reuters) - U.S. stock futures pared early losses on Friday after softer-than-expected inflation data revived hopes for a Federal Reserve rate cut, even as strong jobs numbers hinted at a longer period of tight policy.

A Labor Department report showed the Consumer Price Index rose 2.4% on a yearly basis, slightly below the estimated 2.5% increase, according to economists polled by Reuters.

The data lands two days after a stronger-than-expected employment report heightened concerns that the U.S. central bank could hold interest rates steady for longer.

"The important takeaway for both (the) rate markets and equities is that the trend in disinflation continues... it kind of reinforces the idea that we are past peak inflation concerns," said Michael Metcalfe, head of market strategy at State Street.

"This is painting a picture of a continued improving inflation outlook, which I think will allow for rates to fall later in the year."

AI disruption fears have snarled sectors spanning software, brokerages, trucking as well as video game developers, with the three main indexes headed for their worst week since November.

At 08:47 a.m. ET, Dow E-minis YMcv1 fell 19 points, or 0.04%, S&P 500 E-minis EScv1 shed 3 points, or 0.04%, and Nasdaq 100 E-minis NQcv1 lost 18.5 points, or 0.07%.

The S&P 500 and the Dow had dropped more than 1% on Thursday, while the tech-heavy Nasdaq tumbled 2%.

Applied Materials AMAT.O shares jumped 11.8% in premarket trading after the chipmaking-equipment firm forecast second-quarter revenue and profit above Wall Street expectations.

Peers Lam Research LRCX.O and KLA KLAC.O gained 1.8% and 1%, respectively.

With earnings season more than halfway through, AI capex outlays emerged as a dominant theme for the "Magnificent Seven" companies, whose cumulative investments are projected to reach about $650 billion. Investors are now demanding real payoffs as they continue to punish sectors they fear could be squeezed by growing competition.

"The central question for equity investors is whether today's surge in capex can translate into durable earnings growth sufficient to justify higher leverage and stretched valuations," Bob Savage, BNY's head of markets macro strategy, said in a note.

Networking equipment provider Arista Networks ANET.N gained 8% on the day after forecasting annual revenue above expectations.

On the trade front, the United States and Taiwan signed a final reciprocal agreement that confirmed a 15% levy for imports from Taiwan, while committing to eliminate or lower tariffs on nearly all U.S. goods.

U.S. President Donald Trump plans to scale back some tariffs on steel and aluminum goods, the Financial Times reported, citing people familiar with the matter.

Nucor NUE.N slipped 5%, Cleveland-Cliffs CLF.N fell 4% and Steel Dynamics STLD.O lost 5.8% after the news.

Aluminum producers Alcoa AA.N and Century Aluminum CENX.O declined 4.8% and 7.6%, respectively.