1

It seems that the Facebook news feed only shows news of friends I interact with.

Is it possible to set it to show news from all my friends?

3

The stories you see in your News Feed are determined by an algorithm that Facebook uses to determine which stories are most relevant to you. Facebook intentionally doesn't show you all of your friends, as you would be more likely to be bored by all friends' activity than others.

At the current time, you cannot override this to see "All" friends, but you can choose to Hide stories from specific friends.

From Facebook Help:

Hover over the top right menu of a story, click the dropdown menu 
and choose what you'd like to hide:
Hide story will remove the story you're looking at from your News Feed
  • Thank you! That helps. I will be on the look out to see if the feature gets implemented in the future. – Nelu Mar 28 '13 at 16:10

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