Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 1, 2025. REUTERS/Brendan McDermid

By Johann M Cherian and Pranav Kashyap

Dec 2 (Reuters) - U.S. stocks were set to open slightly higher on Tuesday, steadying after Wall Street's first pullback in more than a week, on growing bets of rate cuts ahead of fresh inflation data later this week.

Investor attention is now focused on Friday's release of the Personal Consumption Expenditures (PCE) Index data from the U.S. Bureau of Economic Analysis, the Federal Reserve's preferred gauge of inflation. The data could offer clues to the Fed's upcoming policy decisions next week.

Geopolitical developments are also in focus, as special envoy Steve Witkoff and U.S. President Donald Trump's son-in-law Jared Kushner are expected to meet Russian President Vladimir Putin for talks on a possible way to end the war in Ukraine.

U.S. stocks kicked off December on a dour note, with the three main indexes marking their first daily losses in more than one week on Monday, pressured by a tick-up in Treasury yields and a selloff in crypto stocks.

Recent data pointing to a gradually cooling economy has reinforced bets on a Federal Reserve rate cut at next week's meeting.

The unexpected contraction in U.S. manufacturing activity in November supports the case for the Fed to cut interest rates in December, said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.

Policymakers are largely divided on the monetary policy path forward, but dovish signals from a few key voting members in recent weeks have had traders pricing in an 87.4% chance for a 25-basis-point cut next week, up from about half that probability last month, according to the CME Group's FedWatch Tool.

Investors are also keenly watching who may succeed Fed Chair Jerome Powell when his term ends next year, with reports suggesting White House economic advisor Kevin Hassett is a top contender. The decision is expected before Christmas.

At 08:28 a.m. ET, Dow E-minis were up 77 points, or 0.16%, S&P 500 E-minis were up 18 points, or 0.26% and Nasdaq 100 E-minis were up 105.75 points, or 0.42%.

Markets are also monitoring developments in Japan after the domestic central bank hinted at a potential rate hike, which sparked a selloff in global bonds including U.S. Treasuries on Monday. A hawkish move could unwind the yen carry trade. [JP/] [US/]

Meanwhile, investors digested robust online holiday spending of $23.6 billion that surpassed analysts' forecasts, Adobe Analytics reported.

Among top movers, Boeing rose 3% in premarket trading after the planemaker said higher deliveries will be a large driver of positive cash flow next year.

Warner Bros Discovery <WBD.O> rose 1.3% after reports said that it received a second round of bids, including an offer from Netflix <NFLX.O>.

Crypto stocks including Strategy and Coinbase were up 1.8% each, as bitcoin prices showed signs of stabilizing after its largest dollar loss since May 2021 in the previous session.

The Organisation for Economic Cooperation and Development raised its 2025 and 2026 growth forecasts for the U.S. economy, pointing to AI investments, fiscal support and potential Federal Reserve rate cuts.

Later in the day, Federal Reserve Vice Chair for Supervision Michelle Bowman is expected to testify before the House Financial Services Committee hearing on Oversight of Financial Regulators.

(Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Tasim Zahid and Shinjini Ganguli)