By Devik Jain and Ambar Warrick
(Reuters) -Wall Street's main indexes were set to rise on Friday as steep losses in September saw investors buying into cheaper sectors, while drugmaker Merck rose on marking progress in the development of an oral COVID-19 drug.
Shares of Merck & Co Inc jumped 8.3% in premarket trading after the company's experimental oral drug for COVID-19, molnupiravir, reduced by around 50% the chance of hospitalization or death for patients at risk of severe disease in a study.
COVID vaccine makers Moderna Inc and Pfizer Inc (NYSE:PFE) fell 4.4% and 1.3%, respectively, after the news.
Wall Street ended sharply lower on Thursday and the S&P 500 posted its worst month since the onset of the global health crisis, following a tumultuous month and quarter wrecked by concerns over COVID-19, inflation fears and budget wrangling in Washington.
"There are few alternatives for investors as they're somewhat negative on the bond market and cash still (yields) a very low return," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
"Investors are still looking for places to enter the market. There's still good support among buyers at lower prices, so I don't think that the ability of the market to rally at the side of meaningful sell-offs is over."
Data showed U.S. consumer spending increased more than expected in August, while the personal consumption expenditure index, a preferred inflation gauge for the Federal Reserve, maintained its upward trend through the month.
Oil firms including Exxon Mobil (NYSE:XOM) and Chevron Corp (NYSE:CVX) rose about 0.5% premarket, while big banks Morgan Stanley (NYSE:MS), JPMorgan Chase & Co (NYSE:JPM), Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Goldman Sachs Group (NYSE:GS) also gained.
Meanwhile, the Democratic-controlled U.S. Congress on Friday was struggling to reach an agreement on President Joe Biden's sweeping agenda, with House of Representatives Speaker Nancy Pelosi vowing to hold a vote on a $1 trillion infrastructure bill.
Biden signed a measure to continue funding the government through Dec. 3, although congressional Democrats and Republicans continued brawling over raising the debt ceiling beyond $28.4 trillion to avert a U.S. credit default.
All eyes are now on factory activity data later in the day for signs of economic health and clues regarding the Federal Reserve's timeline for tapering its asset purchases and hiking key interest rates.
At 8:48 a.m. ET, Dow e-minis were up 84 points, or 0.25%, S&P 500 e-minis were up 8.25 points, or 0.19%, and Nasdaq 100 e-minis were up 5 points, or 0.03%.
The S&P 500 on Thursday closed below its 100-day moving average (DMA), a closely watched technical indicator, for the first time since November 2020. All the three major Wall Street indexes are trading below their 100-DMAs.
Cryptocurrency-linked stocks rose as bitcoin rallied after Fed Chair Jerome Powell said the United States had no plans to ban cryptocurrencies.
Coty Inc rose 5.1% after agreed to sell ~9% stake in professional beauty business Wella to KKR & Co Inc.