By Johann M Cherian and Ankika Biswas

Jan 11 (Reuters)Futures on the tech-heavy Nasdaq rose on Thursday, as Treasury yields slipped ahead of an inflation print that could test hopes of early interest-rate cuts, while regulatory approval for exchange-traded funds tracking Bitcoin lifted crypto stocks.

Megacaps including AMZN.O, Tesla TSLA.O, Nvidia NVDA.O and Meta Platforms META.O rose between 0.5% and 1% in premarket trading, with U.S. Treasury yields falling modestly.

The benchmark S&P 500 .SPX has recovered nearly 17% from its October lows, gaining steam in December after the Federal Reserve hinted it was reining in inflation and rate cuts were “coming into view”.

The index is a hair’s breadth away from its record closing high of 4796.56, hit in January 2022.

Focus is now on the December Consumer Price Index (CPI) report, due at 8:30 a.m. ET, which could help traders assess the timing of the Fed’s monetary policy easing.

While inflation has edged lower in the face of the central bank’s rapid interest-rate hikes, economists polled by Reuters expect the headline CPI to tick up to 3.2% in December – well above the Fed’s 2% target.

Prices excluding volatile items like food and energy in December are forecast to remain unchanged at 0.3% from the previous month, while year-on-year inflation is expected to slow to 3.8% from November’s 4%.

“Data in line, or ideally softer than expected, will keep the Fed doves in charge of the market,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

“The ongoing tensions in the Red Sea region and the rising cost of moving goods will remain in the back of our minds… but disinflation remains the base case scenario for 2024 due to weakening demand.”

Money markets see a 65% chance the central bank will deliver its first rate cut of at least 25 basis points in March and a 96.5% probability of another reduction in May, despite recent pushback from policymakers.

A separate report at 8:30 a.m. ET is expected to show that the number of Americans filing for unemployment benefits rose to 210,000 in the week ending Jan. 6, from 202,000 a week ago.

Investors will also parse remarks by Richmond Fed President Thomas Barkin, a voting member this year, later in the day.

Crypto stocks like Coinbase COIN.O Bitfarms BITF.O and Riot Platforms RIOT.O advanced between 6% and 9% after the U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETF) to track Bitcoin BTC=.

At 7:18 a.m. ET, Dow e-minis 1YMcv1 were down 23 points, or 0.06%, S&P 500 e-minis EScv1 were up 4.75 points, or 0.10%, and Nasdaq 100 e-minis NQcv1 were up 58.5 points, or 0.35%.

CitigroupC.N declined 1.5% after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, to be reported on Friday.

Other banks like JPMorgan Chase JPM.N, Bank of America BAC.N and Wells Fargo WFC.N are also set to report on Friday.

Lyft LYFT.O lost 1.2% after Goldman Sachs downgraded the ride-hailing platform’s stock to “neutral” from “buy”.

NetflixNFLX.O rose 2% on a report that its ad-supported tier has reached more than 23 million active users per month globally.

Core CPI

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Pooja Desai)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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