(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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Futures up: Dow 0.24%, S&P 500 0.22%, Nasdaq 0.24%

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Applied Materials ( AMAT ) flags $600 mln revenue hit in 2026

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USA Rare Earth ( USAR ) rises after report firm in talks with White

House

(Updates prices)

By Niket Nishant and Sukriti Gupta

Oct 3 (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 ( USAR ) jumped 9.6% after CEO Barbara Humpton told CNBC

the company was "in close communication" with the White House.

Applied Materials ( AMAT ) 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 ( LRCX ) lost 1.8%.