US stock futures rise on rate-cut optimism

By Niket Nishant and Sukriti Gupta (Reuters) -U.S. stock index futures climbed on Friday as optimism about an imminent interest-rate cut boosted investor sentiment ahead of the final trading session of a week marked by volatility due to a federal government shutdown that extended to a third day. The shutdown, which began on Wednesday, has disrupted the flow of critical data that the U.S. Federal Reserve uses to assess if economic conditions justify a reduction in borrowing costs. The much anticipated nonfarm payrolls report that was originally scheduled for a Friday release has now been postponed, leaving investors to rely on other indicators, which suggest a softening in the labor market, keeping alive bets on an impending rate cut. The optimism, coupled with strength in the technology sector, helped investors look past the impasse in Washington so far. The three main Wall Street indexes marked record closing highs on Thursday and were on track to notch weekly gains, should the current levels hold through Friday's session. "Solid macroeconomic conditions, supported by healthy consumer activity combined with an opportunity for the Fed to ease rates, have contributed to a market environment where stock volatility has been largely contained," said Anthony Saglimbene, chief market strategist at Ameriprise Financial. At 06:49 a.m. ET, Dow E-minis rose 114 points, or 0.24%, S&P 500 E-minis were up 15 points, or 0.22%, and Nasdaq 100 E-minis gained 59.25 points, or 0.24%. Still, the rally has shown signs of fragility, with stocks occasionally retreating as traders lock in gains. Investors will now turn to the Institute for Supply Management's non-manufacturing PMI data for September that is due later in the day. The final readings of S&P Global services and composite PMIs for September are also on deck. These data points may carry outsized weight in shaping near-term expectations for Fed action, making equities susceptible to headline-driven swings. New York Fed President John Williams said central banks needed to be aware that unpredictable change was inevitable and strategize to operate in those environments. Dallas Fed President Lorie Logan will speak at a conference later in the day. Fed Vice Chair Philip Jefferson is also scheduled to discuss the U.S. economic outlook and policy framework in Philadelphia. In stocks, Tesla rose about 1% in premarket trading after dropping more than 5% on Thursday. Shares of USA Rare Earth jumped 9.6% after CEO Barbara Humpton told CNBC the company was "in close communication" with the White House. Applied Materials fell 2.9% after the chip-equipment maker forecast a $600 million hit to fiscal 2026 revenue on broader semiconductor export curbs. Shares of peer Lam Research lost 1.8%. (Reporting by Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Krishna Chandra Eluri and Pooja Desai)

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