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Indexes: Dow up 0.59%, S&P 500 up 0.18%, Nasdaq down 0.03%

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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 of talks with White

House

(Updates after markets open)

By Niket Nishant and Sukriti Gupta

Oct 3 (Reuters) -

Wall Street's main indexes hit intraday record highs on

Friday as optimism about an imminent interest-rate cut by the

Federal Reserve boosted sentiment in 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 economic data, including the

highly anticipated nonfarm payrolls report that was originally

scheduled for release on Friday.

It has now been postponed, leaving investors to rely on

other indicators that suggest a softening in the labor market,

keeping bets on an impending rate cut alive.

Coupled with the strength in the technology sector, the

optimism has so far helped investors look past the federal

impasse. The three main indexes are on track to notch weekly

gains if the current levels hold.

"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 10:09 a.m. ET, the Dow Jones Industrial Average

rose 274.53 points, or 0.59%, to 46,794.89, the S&P 500

gained 12.09 points, or 0.18%, to 6,727.44, and the Nasdaq

Composite lost 7.27 points, or 0.03%, to 22,836.64.

The S&P 500 tech sector rose 0.2%. Healthcare

stocks gained 1.3%, adding to the week's rally. Humana

and Danaher ( DHR ) added 5.6% and 4.2%, respectively,

and were among the top performers on the benchmark index.

Communication services shares on the S&P 500

fell 0.9%, dragged by losses in Meta Platforms ( META ) and

Alphabet, which were down 1.2% and 1.4%, respectively.

The losses also weighed on the Nasdaq.

A gain in banks such as Goldman Sachs ( GS ) and

JPMorgan ( JPM ), which rose 0.5% and 1%, respectively, boosted

the Dow.

Meanwhile, BofA Global Research forecast on Friday that

the Fed would deliver its next interest-rate cut in October

instead of December, citing soft labor market data.

However, Chicago Fed President Austan Goolsbee said he

was

hesitant to commit

to a series of rate cuts, with inflation still running

above the central bank's 2% target.

Data from the Institute for Supply Management showed

non-manufacturing activity stood at 50 last month, compared with

an estimate of 51.7, according to economists polled by Reuters,

capping some early gains.

New York Fed President John Williams said central banks

needed to be aware that unpredictable changes were inevitable

and should strategize to operate in those environments.

Investors will parse comments from Dallas Fed President

Lorie Logan and Fed Vice Chair Philip Jefferson later in the

day.

In stocks, 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 USA Rare Earth ( USAR ) jumped 19.6% after CEO

Barbara Humpton told CNBC the company was "in close

communication" with the White House.

Advancing issues outnumbered decliners by a 2.59-to-1 ratio

on the NYSE and by a 2.43-to-1 ratio on the Nasdaq.

The S&P 500 posted 31 new 52-week highs and one new low,

while the Nasdaq Composite recorded 110 new highs and 17 new

lows.