US futures ease with investors' focus on data, Alphabet shines

(Reuters) -U.S. stock index futures edged lower on Tuesday, cooling from a tech-fueled rally on Wall Street in the previous session, as investors awaited economic data and earnings that could offer insight

into the resilience of the American consumer.

Bucking broader declines, Alphabet gained 3.1% in premarket trading after a report said Facebook parent Meta was in discussions to use Google's AI chips in its data centers from 2027 and to rent chips from Google Cloud by next year.

Nvidia and Advanced Micro Devices, which currently dominate the AI chips sector, fell about 3% each, while Broadcom, which has a partnership with Alphabet, gained 2.3%.

Shares of the Google parent have rallied 68% this year, outperforming other megacaps and bringing it close to the prized $4 trillion market capitalization. The latest tailwind was a stake by Warren Buffett's Berkshire Hathaway and strong early reviews of its new Gemini 3 model.

Nasdaq logged its biggest one-day gain in six months on Monday as investors took notice of tech stocks which had been the center of a month-long rout on Wall Street on worries the sector was overvalued.

The recent turnaround in sentiment was driven by increasing bets the Federal Reserve will lower borrowing costs when it meets in December following dovish remarks by influential voting members on the Federal Open Market Committee such as John Williams and Christopher Waller.

A report also said San Francisco Fed President Mary Daly also backed lowering interest rates next month. 

Markets are pricing in a 80% likelihood the Fed will lower borrowing costs by 25 basis points next month, up from around 40% last week, according to the CME Group's FedWatch Tool.

At 05:24 a.m. ET, Dow E-minis were down 73 points, or 0.16%, S&P 500 E-minis were down 12.75 points, or 0.19%, and Nasdaq 100 E-minis were down 83.5 points, or 0.33%.

CONSUMER RESILIENCE IN SPOTLIGHT

Investors will assess September retail sales data and the Conference Board's November consumer confidence report due later in the day, which could offer clues into the health of the American consumer at a time when tariff-induced price pressures and layoffs have grabbed headlines.

A delayed producer prices inflation report for September is due at 8:30 a.m. ET, with the focus on components that feed into the Fed's preferred inflation gauge - the Personal Consumption Expenditures Index.

Earnings from consumer-oriented companies including Dick's Sporting Goods , Best Buy , Abercrombie and Kohl's are also on tap before the markets open.

For retailers, the holiday shopping season this month between the Thanksgiving holiday on Thursday through Cyber Monday next week will be crucial for sales.

Among others, Coherent fell 2.9% after a report said Bain Capital is seeking $1.14 billion in the optical devices maker in a block trade.

Communications company Zoom gained 3.7% after raising its annual earnings forecast.

Investors also monitored developments around a Ukraine peace deal and signs of improving Sino-U.S. trade relations. 

(Reporting by Johann M Cherian in Bengaluru; Editing by Krishna Chandra Eluri)