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Futures Rally as Data Eases Inflation Worries"

U.S. stock indexes were set to open higher on Tuesday as wage growth data suggested that inflation was easing ahead of the Federal Reserve's decision on interest rates.

The U.S. labor costs increased less than expected last quarter as wage growth slowed, indicating that the central bank's approach to controlling inflation was effective.

The Federal Reserve will make its decision on interest rates on Wednesday, with traders predicting a 25-basis-point hike and a terminal rate of 4.9% in June. Futures were lower earlier in the day due to disappointing earnings and forecasts from companies including Caterpillar, McDonald's, and Pfizer. However, General Motors and United Parcel Service reported strong profits and added to market gains.

The U.S. 10-year Treasury yield fell after the labor costs data was released and was last at 3.50%. The market is expected to end January higher, with the Nasdaq up nearly 9%, but participants are cautious heading into the Fed meeting as higher interest rates tend to pressure the valuations of tech and growth stocks.

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