Nasdaq futures jumped 1% Friday as megacap tech and chip stocks bounced back after a drubbing earlier this week, while investors hoped for a further let-up in inflation in a crucial data release later in the day.

Megacap tech stocks including Apple, Nvidia , Alphabet, Microsoft, Meta Platforms , Amazon.com and Tesla were up between 0.7% and 2.2% in premarket trading.

Chip stocks also rebounded, with Intel, Broadcom , Qualcomm, Micron Technology and Arm Holdings up around 2% each.

At 5:32 a.m. ET, Dow e-minis were up 182 points, or 0.45%, S&P 500 e-minis were up 41.25 points, or 0.76%, and Nasdaq 100 e-minis were up 200.75 points, or 1.06%.

Investors have dumped megacap tech stocks in the past few weeks, with disappointing earnings from Alphabet and Tesla sparking a sharp selloff in the "Magnificent Seven" on Wednesday. The setting up the S&P 500 and the Nasdaq for their second straight weekly decline.

Concerns over Wall Street's growing dependence on the set of high-momentum stocks, whose valuations now appear over-stretched, have turned underperforming sectors like mid- and small-cap stocks more alluring on rising prospects of early Federal Reserve rate cuts.

The much-awaited personal consumption expenditures (PCE) price index data - the Fed's preferred inflation gauge - will be watched for signs of further cooling in inflation. Recent signs of easing inflation and a weakening labor market have boosted bets of an early start to interest rates cuts.

Traders have priced in around two rate cuts by December, as per LSEG data, while bets of a 25-basis-point cut by the Fed's September meeting stood at 88%, according to CME's FedWatch.

The Commerce Department's report, due at 8:30 a.m. ET, is expected to show PCE rose 0.1% on a monthly basis in June after last month's flat reading. Excluding volatile items like food and energy, the core figure is seen increasing 0.1% after a similar rise in May.

Earlier this week, data showing faster-than-expected second-quarter economic growth and subsiding inflation pressures left intact hopes of a September rate cut, boosting the blue-chip Dow and the small-cap Russell 2000.

Futures tracking the Russell 2000 climbed 1.7% on Friday.

On the earnings front, Deckers Outdoor jumped 11.6% after raising its annual profit forecast following a first-quarter results beat.

Medical device maker Dexcom slumped 36% after cutting its annual revenue forecast, while Oilfield services firm Baker Hughes climbed 2.1% after beating estimates for second-quarter profit.

Investors also kept an eye out for the developments on the U.S. Presidential race, with new opinion polls showing Vice President Kamala Harris narrowing the gap with Republican rival Donald Trump.