Updates before market open

By Ragini Mathur and Avinash P

July 14 (Reuters) - The S&P 500 and the Nasdaq were set for a higher open on Tuesday after softer-than-expected inflation data fueled bets that the Federal Reserve could take a less hawkish stance on interest rates, while investors assessed second-quarter results from major U.S. banks.

The Labor Department data showed that the consumer price index rose 3.5% in June from a year earlier, below Reuters-polled economists' forecast of 3.8%. On a monthly basis, CPI fell 0.4%, compared with expectations for a 0.1% decline.

Following the report, traders sharply pared back expectations for near-term policy tightening. They see about a 15% chance of a quarter-point rate increase at the Fed's upcoming meeting, down from 35% before the data.

"It suggests the inflation surge driven by the Iran war is fading, but this may just be a temporary relief as tensions have escalated in recent days," said Skyler Weinand, chief investment officer at Regan Capital.

"The weaker inflation data likely keeps the Fed on hold for now and reduces any rate hike odds, but we remind investors that almost every communication that has emanated from Chair Warsh during his short tenure so far has been hawkish."

Fed Chair Kevin Warsh is scheduled to deliver the central bank's semi-annual monetary policy report to Congress at 10 a.m. ET.

EARNINGS IN FOCUS

IBM IBM.N shares tumbled 21.7% in premarket trading after the software and consulting firm forecast preliminary second-quarter revenue below estimates.

Shares of some other software companies also fell, tracing declines in IBM. Oracle ORCL.N dropped 1.1% and Service Now NOW.N fell 7.6%. Accenture ACN.N declined 7.4%.

Big bank results kick-started the second-quarter earnings season on Wall Street.

Goldman Sachs GS.N gained 3.8% after it exceeded second-quarter profit expectations , as dealmaking picked up pace and market volatility due to the Middle East war boosted the equities business to a record.

JPMorgan Chase JPM.N and Citigroup C.N, however, declined 2.8% and 1.2%, respectively, despite reporting higher second quarter profit.

Bank of America BAC.N and Wells Fargo WFC.N also fell 0.5% and 1.3%, respectively, even after beating estimates for second-quarter profit.

Investors scrutinized the results for early signals on the health of corporate America. The earnings season could prove pivotal for this year's equity rally, which has lifted the benchmark S&P 500 .SPX by about 10%.

At 08:56 a.m. ET, Dow E-minis YMcv1 were down 138 points, or 0.26%, and S&P 500 E-minis EScv1 were up 13.5 points, or 0.18%. Nasdaq 100 E-minis NQcv1 were up 280.25 points, or 0.95%.

Nasdaq futures gained ground after the tech-heavy index .IXIC fell 1.6% on Monday.

Geopolitical tensions were also on investors' radar after the U.S. and Iran exchanged attacks in the Gulf. Markets took stock of the possibility of a 20% fee on cargo ships passing through the Strait of Hormuz, which helped lift oil futures to their highest level in four weeks.

Chip stocks steadied after sharp losses in the previous session, with the iShares Semiconductor ETF SOXX.O rising 4.6%.