(Reuters) -Futures tracking the Dow and the S&P 500 were higher on Friday, underpinned by expectations of an interest rate cut in September, while UnitedHealth surged after Berkshire Hathaway raised its stake in the health insurer.
UnitedHealth Group gained more than 12% in premarket trading after Warren Buffett's company revealed a new investment in the health insurer, while a securities filing also showed Michael Burry's Scion Asset Management included bullish positions in the company.
Rising costs
in the broader healthcare sector and an about 46% slump in heavyweight UnitedHealth's shares this year have left the blue-chip Dow lagging its Wall Street peers on the road to record highs.
This week however, the healthcare sector is the top performer on the benchmark S&P 500 and is on track for its best weekly performance in three.
Other insurers including Elevance, Centene and Molina added more that 4.4% each before the bell on Friday.
More broadly, the main U.S. stock indexes are on track for their second week of gains, buoyed by expectations that the Fed could restart its monetary policy easing cycle with a 25-basis-point interest rate cut in September.
The central bank last lowered borrowing costs in December and said U.S. tariffs could add to price pressures. However, recent labor market weakness and signs that tariff-induced inflation was yet to reflect in headline consumer prices have made investors confident of a potential dovish move next month.
"A 25bps rate cut is still almost fully priced in although it has put a dampener on tentative expectations that the Fed could deliver an even larger 50bps rate cut like last September," analysts at MUFG said in a note.
"Market participants are still confident that the Fed will resume rate cuts in response to weakness in the labor market and the lack of pass through so far to consumer prices from higher tariffs as evident in this week's CPI report."
At 05:38 a.m. ET, Dow E-minis were up 285 points, or 0.63%, S&P 500 E-minis were up 3 points, or 0.06%, and Nasdaq 100 E-minis were down 46.5 points, or 0.19%.
Focus will now be on July retail sales data, due later in the day, and the University of Michigan's report on consumer confidence, for clues on the health of the American consumer.
Among other stocks, Applied Materials tumbled 14.8% after the chip equipment maker issued weak fourth-quarter forecasts on sluggish China demand, fueling concerns over tariff-related risks.
Shares of other chip equipment makers such as KLA and Lam Research lost 6.1% and 5.6%, respectively.
Intel rose 2.8% on the heels of a 20% gain this week after a report said the Trump administration was in talks with the struggling chipmaker for the U.S. government to potentially take a stake in the company.
On the commodities front, crude prices slipped to around $65 a barrel with attention on a meeting in Alaska between U.S. President Donald Trump and his Russian counterpart, Vladimir Putin, that markets hope could pave the way for a resolution to the Ukraine conflict. The meeting will take place at 1900 GMT.
(Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath)
