By Ankika Biswas and Lisa Pauline Mattackal
(Reuters) -The main U.S. indexes were set for a muted open on Tuesday, as investors refrained from placing big bets before AI chip leader Nvidia's earnings this week and amid policy caution from Federal Reserve officials ahead of the central bank's meeting minutes.
Rate-setters have offered few clues on the timing for rate cuts this year and several Fed officials on Monday refrained from noting inflation moderating to the 2% target despite recent data pointing to easing consumer price pressures.
That weighed on market sentiment, with investors now awaiting remarks during the day from officials including Christopher Waller, Thomas Barkin, Raphael Bostic and Michael Barr ahead of the Fed's latest policy meeting minutes on Wednesday.
"On our inflation forecast, we continue to expect the Fed to deliver the first cut in December... An earlier cut is possible, but it likely requires a string of more favorable inflation prints and some softening in labor market data," Deutsche Bank (ETR:DBKGn) Research analysts said in a note.
Traders currently factor in about 42 basis points of Fed rate reductions this year, with a quarter-point cut fully priced in for November.
Technology stocks kicked off the week on a strong note, driving the tech-heavy Nasdaq to its highest closing level on Monday while the S&P 500 inched closer to its all-time high hit last week.
Nvidia's quarterly earnings on Wednesday are in focus, likely to be a significant market trigger and a litmus test for the success of the generative AI boom.
Data from options analytics firm Trade Alert showed Nvidia's options are primed for an 8.7% swing in either direction by Friday, translating to a market cap swing of $200 billion.
"In Nvidia's case, the confidence around the artificial intelligence boom is more than just hype... It has real substance," said Derren Nathan, head of equity research, Hargreaves Lansdown (LON:HRGV).
Nvidia's shares were up 0.4% in premarket trading.
At 8:25 a.m. ET, Dow e-minis were up 12 points, or 0.03%, S&P 500 e-minis were down 0.75 points, or 0.01%, and Nasdaq 100 e-minis were down 27.5 points, or 0.15%.
Palo Alto Networks dropped 6% after its fourth-quarter billings forecast disappointed investors, while Lowe's Cos rose 3% after the retailer's quarterly sales slowed less than forecast.
Macy's (NYSE:M) gained 3.5% after the department store operator raised the low end of its annual sales forecast, despite posting a bigger-than-expected drop in sales for the first quarter.
Peloton Interactive fell 6.4% as the fitness equipment maker was looking to refinance its debt to regain its footing amid falling sales.
U.S.-listed shares of Li Auto (NASDAQ:LI) lost 3.3% after the Chinese firm postponed plans to launch pure electric SUV models to next year.