U.S. stock index futures rose on Friday after Wall Street rallied sharply higher in the previous session, spurred by hopes that cooling inflation will push the Federal Reserve to take a less aggressive stance in its interest rate hikes.

The benchmark S&P 500 and the tech-heavy Nasdaq closed 5.5% and 7.4% higher on Thursday, racking up their biggest daily percentage gains in over 2-1/2 years after data showed annual inflation below 8% for the first time in eight months.

Futures contracts tied to the Fed’s benchmark rate show traders now expect the blistering pace of policy tightening to slow next month, and for the U.S. central bank to stop its rate hikes sooner than expected.

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Investors are now betting on a 50-basis point rate hike in December, while the top policy rate is seen in the 4.75%-5% range next March, lower than the 5% plus range seen before the inflation data.

The S&P 500 has now rallied over 10% from its mid-October closing lows, while the Nasdaq has climbed nearly 8%, aided by better-than-expected earnings reports and hopes of a Fed slowdown.

However, both the indexes are down sharply on a year-to-date basis, on course for their worst annual performance since 2008, on fears that surging inflation and rising interest rates will dent corporate profits.

At 05:48 a.m. ET, Dow e-minis were up 130 points, or 0.39%, S&P 500 e-minis were up 16.25 points, or 0.41%, and Nasdaq 100 e-minis were up 66 points, or 0.57%.Shares of megacap companies extended gains in premarket trading, with Apple Inc up 0.5% after a near 9% surge in the previous session.

U.S.-listed shares of Chinese companies rose, with Alibaba Group Holding Ltd up 3.9% as China eased some of its strict COVID-19 rules.

A survey from the University of Michigan due later in the day is expected to show consumer sentiment eased slightly in November, with the index seen slipping to 59.5 points this month from 59.9 in October.