U.S. stock indexes were set to open higher on Tuesday as data showed consumer prices rose modestly in May, cementing expectations that the Federal Reserve could skip raising interest rates this week.

The U.S. Labor Department’s consumer price index (CPI) reading showed inflation rose 0.1% last month compared with a 0.4% jump in April, with core inflation remaining unchanged at 0.4%.

On a year-on-year basis, headline inflation increased by a lower-than-estimated 4.0%, the smallest rise in more than two years.

The Fed will commence its two-day policy meeting later in the day, with an interest rate decision due on Wednesday, followed by Chair Jerome Powell’s news conference.

“Today’s fall in the rate of inflation is likely to be welcomed by investors, but it remains stubbornly above the Fed’s 2% target,” said Richard Flynn, managing director of Charles Schwab UK.

“The good news is that the ‘stickiness’ in inflation is now confined to a smaller number of categories compared to earlier in the year.”

Traders have fully priced in that the central bank will hold interest rates at the 5%-5.25% range, while expecting a 67% chance of a 25-basis-point hike in July, according to the CME Fedwatch tool.

The S&P 500 and the Nasdaq logged their highest closing levels since April 2022 on Monday, lifted by market heavyweights including Amazon.com, Apple and Tesla.

The benchmark S&P 500 has risen 21% from its October 2022 lows, heralding a bull market according to some investors.

At 8:53 a.m. ET, Dow e-minis were up 56 points, or 0.16%, S&P 500 e-minis were up 15.25 points, or 0.35%, and Nasdaq 100 e-minis were up 101.75 points, or 0.69%.

Oracle Corp jumped 5.7% premarket as the software firm topped quarterly revenue estimates and forecast an upbeat current quarter.

Intel Corp gained 3.4% after the chipmaker entered in talks with SoftBank Group Corp’s Arm to be an anchor investor in its initial public offering.

Apple slipped 0.4% after UBS downgraded the iPhone maker to “neutral” from “buy”.

Advanced Micro Devices rose 2.8% ahead of unveiling details about its “AI Superchip”.

Bunge Ltd slipped 2.0% after the U.S. grains merchant and Glencore-backed Viterra said they were merging to create an agricultural trading giant worth about $34 billion, including debt.

U.S.-listed shares of Chinese companies including JD.com , Alibaba Group, Baidu and Netease rose between 2.8% and 5.3% after China’s central bank lowered its short-term lending rate for the first time in 10 months. – Reuters