By Bansari Mayur Kamdar and Johann M Cherian
(Reuters) -Wall Street's main indexes were set to open higher on Friday, setting the Dow on track for its tenth straight day of gains, while megacap growth and technology stocks recovered after sharp losses in the previous session.
The S&P 500 and the Dow were on track to end the week higher after Dow on Thursday outperformed others, notching its longest winning streak in almost six years, supported by gains in Johnson & Johnson (NYSE:JNJ) on strong forecast.
"As opposed to a laser focus on technology, communication services and consumer discretionary, we are starting to see some of the laggards find some love here in the form of energy, financials and healthcare," said Art Hogan, chief market strategist at B Riley Wealth.
"That would certainly have an outsized impact on the Dow," he said, adding the trend was "more telling of catch up trade in the back half of this year where investors are starting to look for those sectors and asset classes that have not worked yet."
The tech-heavy Nasdaq lagged in the previous session as earnings reports from Tesla (NASDAQ:TSLA) and Netflix (NASDAQ:NFLX) failed to dazzle.
The megacap electric automaker recovered 1.4% in premarket trading on Friday, and the streaming video company edged higher.
The NYSE FANG+TM index, that houses the megacap growth names, also closed 4.6% lower in the previous session, notching its worst day so far in 2023.
The "laser focus" on growth stocks, as described by Hogan, drove Nasdaq up 34.4% this year, which was also supported by optimism over artificial intelligence, a relatively resilient U.S. economy and expectations the end of the Federal Reserve's aggressive rate hike cycle was on the horizon.
While the Fed is widely expected to go for a 25 basis point hike at its July 25-26 meeting next week, market participants have been mixed as to where it will go in the ensuing months.
"We expect Powell to cautiously avoid implying that the FOMC has already reached an agreement, but (we) are confident that he does want to slow the pace and that the FOMC will end up skipping in September," said David Mericle, chief U.S. economist at Goldman Sachs (NYSE:GS), in a note.
At 08:28 a.m. ET, Dow e-minis were up 51 points, or 0.14%, S&P 500 e-minis were up 17.5 points, or 0.38%, and Nasdaq 100 e-minis were up 97.75 points, or 0.63%.
Expiration of monthly options on Friday is expected to add to market volatility during the session, as per analysts.
Toymaker Mattel (NASDAQ:MAT)'s shares added 1.7% as the much-anticipated "Barbie" film debuted in theaters globally.
American Express (NYSE:AXP) fell 3.9% after the credit card giant missed quarterly revenue expectations and kept its forecast for full-year profit unchanged, which unnerved investors.
SLB slipped 2.4% even as the top oilfield services firm posted upbeat quarterly profit as a rebound in offshore and international drilling activity boosted demand for its equipment.
Investors were also awaiting a special rebalancing of the multi-trillion dollar Nasdaq 100, which is due at the close of trading on Friday.