US STOCKS-S&P 500, Nasdaq gear up for higher open as chipmakers advance at end of choppy week

Updates before markets open

By Medha Singh and Pranav Kashyap

Jan 16 (Reuters) - The S&P 500 and the Nasdaq headed for a stronger open on Friday as chipmakers returned to the driver's seat in a volatile week that also marked the start of the fourth-quarter earnings season.

Memory chipmakers led the gains, with Micron MU.O, Western Digital WDC.O, Seagate Technology STX.O and SanDisk SNDK.O up between 3.6% and 5%, building on their searing rallies in 2025.

The iShares Semiconductor ETF SOXX.O gained 1.8% on Friday, lifting its near 12% rally so far this year that has handily beaten the Nasdaq 100's .NDX 1.2% rise, underscoring investor faith in AI-riven chip demand even as money shifts out of some heavyweight tech names into more undervalued areas such as small caps, materials and industrial stocks.

U.S. stocks were limping toward modest weekly losses, even after the S&P 500 and the Dow punched out fresh record closes on Monday. The S&P is now hovering just about 60 points shy of the 7,000 milestone - a mark that analysts have pegged as a potential pocket of technical resistance.

Worries over the fallout of a proposed one-year cap on credit card interest rates at 10% weighed on lenders' shares and broader markets despite strong quarterly showings from big U.S. banks.

The financial sector .SPSY was headed toward its worst week since October.

"Banks set up the week nicely to say the consumer is still spending and there's nothing to worry about yet. We will se if that is being translated into more consumption," said Jason Barsema, president of Halo Investing.

Markets will remain shut on Monday on account of Martin Luther King, Jr. Day, but the earnings season will gather steam next week with results due from the likes of Netflix NFLX.O, Johnson & Johnson JNJ.N and Intel INTC.O.

At 8:36 a.m. ET, Dow E-minis YMcv1 were up 8 points, or 0.02%, S&P 500 E-minis EScv1 were up 8.5 points, or 0.12% and Nasdaq 100 E-minis NQcv1 were up 112 points, or 0.44%.

Rekindled concerns on threats to the Federal Reserve's independence added another layer of uncertainty after Chair Jerome Powell said on Sunday that the Justice Department had opened a criminal investigation into him.

A run of key economic data this week reinforced bets for a prolonged rate pause by the Fed. Traders are betting that the central bank will hold rates steady in this month's meeting and have fully priced in a quarter-point rate cut only in July, LSEG data showed.

"The S&P 500 appears to be sustaining its upward trend in a cautious manner," said Linh Tran, senior market analyst at XS.com.

"The most plausible scenario remains sideways movement with a cautious upward bias. Any further upside will likely depend more on genuine corporate earnings growth."

Remarks from Fed governors Michelle Bowman and Philip Jefferson later in the day will offer clues on voting members' thinking before the U.S. central bank enters its blackout period ahead of its January 27-28 policy meeting.

Among other stocks, J.B. Hunt Transport Services JBHT.O dropped nearly 5% after the U.S. trucking firm reported a dip in quarterly revenue from a year ago.

PNC Financial PNC.N rose 4.6% after beating fourth-quarter revenue estimates.

State Street STT.N dipped 3% after reporting a fall in fourth-quarter profit.

Independent power producers dropped after a report said U.S. states seeing a rapid expansion in data center construction will sign an agreement with the Trump administration intended to curb rising electricity costs.

Talen Energy TLN.O slumped 8.1%, while Constellation Energy CEG.O and Vistra VST.N fell about 4.5% each.

U.S. industrial production data for December is due later in the day.

(Reporting by Medha Singh and Pranav Kashyap in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; X, formerly Twitter: @medhasinghs;))