(Reuters) -U.S. stock index futures rose on Friday as hopes of an interest rate cut underpinned sentiment in the final trading session of a volatile week, marked by a government shutdown that has dragged into its third day.
The shutdown, which began on Wednesday, has disrupted the flow of critical data that the Federal Reserve uses to assess whether economic conditions justify an interest rate cut.
Among the data casualties is the closely watched nonfarm payrolls report, which was scheduled for release
on Friday but has now been postponed, leaving investors to rely on other indicators that have suggested softening in the labor market and kept bets for a rate cut alive.
The optimism, coupled with strength in the technology sector, has helped investors look past the impasse in Washington so far.
The three major Wall Street indexes marked record closing highs on Thursday and are on track to notch weekly gains should 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 05:07 a.m. ET, Dow e-minis were up 104 points, or 0.22%, U.S. S&P 500 E-minis were up 18 points, or 0.27%, and Nasdaq 100 E-minis were up 72.5 points, or 0.29%.
Still, the rally has at times 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, due later on Friday. Final readings of S&P Global services and composite PMIs for September are also on deck.
These releases may carry outsized weight in shaping near-term expectations for Fed action, making equities susceptible to headline-driven swings.
Fed watchers will have a slate of central bank speakers to parse on Friday. New York Fed President John Williams is set to deliver a keynote address in Amsterdam, while Dallas Fed President Lorie Logan will speak at a conference.
Fed Vice Chair Philip Jefferson will also discuss the U.S. economic outlook and policy framework in Philadelphia.
Among individual stocks, Tesla rose 1.8% in premarket trading after dropping more than 5% on Thursday. Shares of USA Rare Earth jumped 7.4% after its CEO Barbara Humpton told CNBC that the company was "in close communication" with the White House.
(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri)
