By Niket Nishant and Sukriti Gupta (Reuters) -Wall Street's main indexes looked set to climb on Friday as optimism about an imminent interest-rate cut by the Federal Reserve boosted sentiment ahead of the final trading session of a week that saw volatility due to the U.S. government shutdown. The federal shutdown, which began on Wednesday, has disrupted the flow of critical data the U.S. central bank uses to assess if economic conditions justify a reduction in borrowing costs. The highly anticipated nonfarm payrolls report originally scheduled for a Friday release has now been postponed, leaving investors to rely on other indicators. These suggest a softening in the labor market, keeping bets on an impending rate cut alive. The optimism, coupled with strength in the technology sector, has so far helped investors look past the impasse in Washington. The three main indexes marked record closing highs on Thursday and were on track to notch weekly gains if the current levels hold through Friday's session. "The market's focused on a couple of different things instead of the shutdown. One is the AI optimism that we've seen over recent days, and then the data that came out this week is pretty supportive of the Fed being able to cut rates," said Veronica Willis, global investment strategist at Wells Fargo Investment Institute in New York. At 08:26 a.m. ET, Dow E-minis rose 68 points, or 0.15%, S&P 500 E-minis added 5.75 points, or 0.08%, and Nasdaq 100 E-minis were up 21.25 points, or 0.08%. 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 influence near-term expectations for the Fed's actions, making equities susceptible to headline-driven swings. New York Fed President John Williams said central banks needed to be aware that unpredictable changes were 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 1.4% in premarket trading after dropping more than 5% on Thursday. Shares of USA Rare Earth jumped 13.4% after CEO Barbara Humpton told CNBC the company was "in close communication" with the White House. Applied Materials fell 2.1% after the chip-equipment maker forecast a $600 million hit to fiscal 2026 revenue on broader semiconductor export curbs. Shares of peer Lam Research shed 1.4%. (Reporting by Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Krishna Chandra Eluri and Pooja Desai)
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