US STOCKS-Wall St set for higher open after softer-than-expected producer price data

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US producer prices rise moderately in December

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Applied Digital (APLD) jumps after report of Macquarie's investment

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KB Home (KBH) up after higher FY housing revenue forecast

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Futures up: Dow 0.33%, S&P 500 0.45%, Nasdaq 0.59%

(Updates before markets open)

By Johann M Cherian and Sukriti Gupta

Jan 14 (Reuters) -

Wall Street's main indexes were on track to open higher on Tuesday, as investors assessed softer-than-expected producer inflation to gauge the Federal Reserve's monetary policy trajectory this year.

A

Labor Department report

showed the producer price index rose 3.3% on an annual basis in December 2024, compared with the 3.4% rise economists polled by Reuters had expected. On a monthly basis, the index rose 0.2%.

Excluding volatile items such as food and energy, the PPI index rose 3.5% in December, compared with an estimate of 3.8%. The focus will now be on the consumer price index report, due on Wednesday.

The yield on the benchmark 10-year Treasury note eased marginally, but at 4.78%, it remained close to its 14-month high.

Megacaps such as Nvidia (NVDA) rose 1.9%, Tesla added 2.6% and Amazon.com (AMZN) climbed 0.9% in premarket trading.

Traders now see the Fed delivering 29.4 basis points worth of rate cuts by the end of the year, up from about 27 bps before the PPI numbers, according to data compiled by LSEG.

"Overall, it was a positive report for the overall equity market and for the bond market," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"Any kind of news that's favorable on the inflation front is positive, because you have the economy still moving forward and so it means that we're moving in the right direction both economically and inflation-wise."

At 08:45 a.m. ET, Dow E-minis were up 142 points, or 0.33%, S&P 500 E-minis were up 26.25 points, or 0.45% and Nasdaq 100 E-minis were up 123 points, or 0.59%.

Futures tracking the domestically focused small-cap Russell 2000 index rose 1%.

Quarterly reports from big banks are also highly anticipated later this week, with the lenders expected to report stronger earnings, fueled by robust dealmaking and trading.

JPMorgan Chase & Co (JPM) inched up 0.1%, Morgan Stanley (MS) edged up 0.4% and Citigroup (C/PN) climbed 0.9%.

Markets also weighed a report that said the incoming Donald Trump administration was considering gradual tariff hikes, including a plan that could increase import duties by 2% to 5% a month.

Comments from Kansas City Fed President Jeffrey Schmid and New York Fed President John Williams, who are voting members on the Federal Open Market Committee, are expected later in the day.

Wall Street's main indexes have been on a downward trend since early December, with the price-weighted Dow down more than 6% from its record high hit last month, and the benchmark S&P 500 at a two-month low.

The central bank's cautious stance on monetary policy easing this year, along with subsequent batches of upbeat economic data, raised investor concerns that inflation might be running high.

Trump is expected to take office on Jan. 20 and his policy proposals on tariffs and immigration are widely expected to fuel inflation.

Applied Digital (APLD) jumped more than 23% after a report said Macquarie would take a 15% stake in it and also invest up to $5 billion in the company's AI data centers.

KB Home (KBH) added 13% after forecasting higher housing revenue in 2025. (Reporting by Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by Pooja Desai)