Traders work on the floor of the NYSE in New York
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 11, 2022. Reuters

U.S. stock index futures pared gains on Wednesday after data showed producer prices increased more than expected in September, in another hot inflation reading that boosted bets of more jumbo-sized interest rate hikes by the Federal Reserve.

The Labor Department's producer prices index rose 8.5% in the 12 months through September, slightly higher than an estimated 8.4% rise. The reading was still lower than and 8.7% increase in August.

"It's stubborn and some people are hoping that we had peak inflation and it's going to come down quickly," said Joe Saluzzi, partner at Themis Trading in Chatham, New Jersey.

"It is not going to be that way. That's what the Fed has been looking at and that's why they're raising rates the way they are. So this will take time and this is not going to be a quick thing."

Persistent inflation has sparked worries about the Fed's aggressive monetary action tipping the world's largest economy into a recession. Money markets are pricing in a 92% chance of another 75-basis-point hike in November. [FEDWATCH]

Still, Wall Street's main indexes eyed a bounce following five straight days of declines in the Nasdaq and the benchmark S&P 500 as recent economic data nearly sealed a case for a fourth consecutive 75-basis-point hike by the Fed.

Battered megacap companies Microsoft Corp, Tesla Inc, Alphabet Inc, Apple Inc and Meta Platforms Inc rose between 0.2% and 0.6% in premarket trading.

Beaten-down chip shares including Nvidia Corp, Qualcomm Inc Micron Technology Inc, Advanced Micro Devices and Intel Corp also rose between 0.2% and 1%.

The United States is scrambling to tackle unintended consequences of its new export curbs on China's chip industry that could inadvertently harm the semiconductor supply chain.

A Reuters report showed the Biden administration has allowed at least two non-Chinese chipmakers operating in China to receive restricted goods and services without their suppliers seeking licenses, the report said.

At 8:51 a.m. ET, Dow e-minis were up 46 points, or 0.16%, S&P 500 e-minis were up 10.25 points, or 0.28%, and Nasdaq 100 e-minis were up 41.25 points, or 0.38%.

PepsiCo Inc gained 2.6% up after the soft-drinks maker raised its annual revenue and profit forecasts on firm demand for its sodas and snacks despite multiple price increases amid rising costs.

Investors will also monitor comments from Fed's Minneapolis President Neel Kashkari, Washington's Vice Chair for Supervision Michael Barr, and New York's Governor Michelle Bowman.