U.S. stock index futures were largely flat in late trading Tuesday as investors braced for key consumer inflation data that is expected to influence the outlook for future interest rate cuts.

Wall Street markets rallied as the producer inflation data came in below expectations, with major U.S. stock indexes returning to levels seen before last week's sharp decline. Low inflation expectations sparked expectations of further interest rate cuts, which became the main driver of the stock market rally.

Tuesday evening, the S&P 500 and Dow Jones stock index futures showed a slight decline, while the Nasdaq 100 futures were essentially flat.

Investor focus is centered on the upcoming Consumer Price Index (CPI) data to be released on Wednesday. The data is expected to show a small decline in inflation in July, which combined with Tuesday's poor producer price index (PPI) data could pave the way for the Federal Reserve Board to further lower interest rates in September.

According to CME Fedwatch, traders are split on whether to cut rates by 25 basis points or 50 basis points in September. However, the probability of a 50 basis point rate cut rose significantly to 53%, influenced by Tuesday's PPI results.

Lower interest rates are good for the stock market as it frees up investable capital. Low interest rates help ease concerns about slowing economic growth, especially after weak labor market data sparked more volatility on Wall Street.

On Tuesday, Wall Street stock indexes rose near two-week highs on optimistic expectations for a rate cut. The S&P 500 rose 1.7 percent to 5,434.43, the Nasdaq Composite gained 2.4 percent to 17,183.95 and the Dow Jones Industrial Average was up 1 percent at 39,765.64.

Investors flocked to undervalued tech companies, particularly leaders in the internet and chip manufacturing sectors, after tech stocks suffered significant losses on poor earnings data. Anticipation of a rate cut prompted investors to buy more stocks in economically sensitive sectors.