By Devik Jain and Anisha Sircar

June 21 (Reuters) - U.S.
stock indexes were set to open higher on Tuesday as investors returned from a long weekend to scoop up shares of megacap growth companies and banks that were hammered in a rout last week on worries over a global economic downturn.

Each of the three major Wall Street indexes fell for the third week in a row in volatile trading and the S&P 500 on Friday suffered its biggest weekly percentage drop since March 2020 following the Federal Reserve's largest interest rate hike in nearly three decades.

Markets have priced in aggressive rate hikes in July and September to battle surging inflation amid growing doubts if the Fed can engineer a soft landing for Business the economy and avoid a recession.

Goldman Sachs now expects a 30% chance of the U.S.

economy tipping into recession over the next year, up from its previous forecast of 15%.

"The market already in a sense may have priced in a shallow recession... you had negative GDP in Q1, so it is possible that the second quarter is negative, in which case the recession could potentially be in the rear-view mirror," said Thomas Hayes, managing member of Great Hill Capital in New York.

All eyes are now on Fed Chair Jerome Powell's testimony to the Senate Banking Committee on Wednesday for clues on future interest rate hikes.

"The only thing that is keeping (Fed) hawkish is they don't have any data to lean on to stop being so hawkish," Hayes said.

At 8:34 a.m.

ET, Dow e-minis were up 438 points, or 1.47%, S&P 500 e-minis were up 60.5 points, or 1.65%, and Nasdaq 100 e-minis were up 188.25 points, or 1.67%.

The S&P 500 and the tech-heavy Nasdaq are in bear market, with the benchmark down 23.4% from its record closing high on Jan. 3.
Markets were closed on Monday for Juneteenth holiday.

Megacap technology and growth stocks Microsoft Corp , Meta Platforms, Apple Inc, Alphabet Inc, Amazon.com and Tesla Inc rose between 1.5% and 3% in premarket trading.

Citigroup added 2.3% to lead gains among big banks.

Kellogg Co climbed 6.7% after the breakfast cereal maker said it was splitting itself into three separate companies, with a focus on snacking, North American cereal and plant-based businesses.

Spirit Airlines jumped 8.5% as JetBlue Airways sweetened its bid to convince the ultra-low cost carrier to accept its offer over rival Frontier Airlines' proposal.

Lennar Corp rose 2.4% after the homebuilder reported upbeat quarterly revenue and profit, helped by a 14% jump in deliveries, higher home prices and strong demand.

The CBOE Volatility index, also known as Wall Street's fear gauge, was down to 30.45 points, its lowest level since June 16.

(Reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)