By Devik Jain and Shreyashi Sanyal
(Reuters) -The Dow and the S&P 500 index were set to open higher on Monday after declining sharply last week on Omicron and taper fears, with investors swapping technology and growth-heavy shares with banks, energy and economy-linked stocks.
Blue-chip stocks such as Goldman Sachs (NYSE:GS), 3M (NYSE:MMM) Co and Chevron Corp (NYSE:CVX) all rose more than 1% in premarket trading, while heavyweight growth stocks including Microsoft Corp (NASDAQ:MSFT), Google-owner Alphabet (NASDAQ:GOOGL) Inc, Meta Platforms and Amazon.com Inc (NASDAQ:AMZN) remained flat to lower.
"Investors are using this as an opportunity to step in to names that they're comfortable with, sort of the large-cap blue-chip stocks and they're testing the market," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
"If today's strength in the blue-chips can sort of sustain itself that might give the rest of the market the ability to start to feel some confidence."
Nvidia Corp slipped 4.2%, adding to a 4.5% drop on Friday after the U.S. Federal Trade Commission sued to block its more than $80 billion deal to buy British chip technology provider Arm.
EU antitrust regulators have temporarily halted their investigation into the takeover deal as they await more information.
Peers Qualcomm (NASDAQ:QCOM) Inc and Advanced Micro Devices (NASDAQ:AMD) Inc also fell.
Tesla (NASDAQ:TSLA) Inc fell 2.8% after Reuters reported that the U.S. SEC has opened a probe into the electric-car maker over whistleblower claims on solar panel defects.
Wall Street's major indexes registered weekly declines on Friday, swinging wildly as investors digested Omicron news and Federal Reserve Chair Jerome Powell's hawkish comments about speedier taper to tackle surging inflation.
The Omicron variant of the coronavirus has spread to about one-third of U.S. states as of Sunday. Although Dr. Anthony Fauci, the top U.S. infectious disease official, told CNN "thus far it does not look like there's a great degree of severity to it".
Goldman Sachs on Saturday cut its outlook for U.S. economic growth to 3.8% for 2022, citing risks and uncertainty around the emergence of the latest variant.
Powell's comments also spurred bets of early interest rate hikes next year, with market participants shifting to cyclical, economy-linked and so-called value names from tech-heavy growth stocks, expecting them to perform better in an environment of tightening monetary policy.
The S&P 500 value index fell about 0.9% last week, but still outperforming its growth counterpart, which dropped 1.5%.
At 8:36 a.m. ET, Dow e-minis were up 223 points, or 0.65%, S&P 500 e-minis were up 14.25 points, or 0.31%, and Nasdaq 100 e-minis were down 40.5 points, or 0.26%.
After a mixed jobs report last week, focus will now be on the release of consumer price index and core inflation readings on Friday for clues on the trajectory of the Fed's policy decision at its December meeting.
Kohl's Corp (NYSE:KSS) rose 4.1% after hedge fund Engine Capital LP said it is pushing the department-store chain to consider a sale of the company or separate its e-commerce division to improve its lagging stock price.