Bank stocks drive Wall Street to all-time highs

By Tanya Agrawal

REUTERS - U.S. stocks touched record highs in late morning trading on Friday as bank stocks rose, while investors shrugged off the surprise result of the British general election.

All three major indexes are on track to end the week higher, with focus turning to the Federal Reserve's meeting next week, where it is widely expected to raise interest rates.

Traders are pricing in a 99.6 percent chance of a rate hike, according to CME Group's FedWatch tool.

The Dow got a boost from Goldman Sachs' 1.9 percent gain, while a more than 2 percent rise in shares of both JPMorgan and Bank of America helped lift the S&P 500 index.

The financial index's 1.46 percent rise topped the gainers among the major S&P 500 sectors.

Investors also looked beyond the UK election, where British Prime Minister Theresa May's Conservative Party lost its parliamentary majority.

May, however, said she would form a new government with assistance from Northern Irish party to provide political certainty.

"While Britain is a bit of a hung parliament at this time, it's not so severe that the Conservatives lose all their power so the Brexit conversation could still be a slow, methodical process," said Phil Blancato, CEO of Ladenberg Thalmann Asset Management in New York.

At 10:35 a.m. ET (1435 GMT), the Dow Jones Industrial Average was up 99.36 points, or 0.47 percent, at 21,281.89 and the S&P 500 was up 11.14 points, or 0.45 percent, at 2,444.93.

The Nasdaq Composite was up 19.04 points, or 0.3 percent, at 6,340.81.

Investor sentiment also got a boost after former FBI Director James Comey's testimony on Thursday was not seen as damaging enough to Donald Trump's presidency.

Comey said Trump fired him to undermine an investigation into Russian meddling into last November's U.S. election and while he had no doubt that Russia interfered with the election, he was confident that no votes had been altered.

"The market was concerned about the information that Comey will bring and the President has, to a degree, come away clean enough that he will not end up in any sort of impeachment issue," said Blancato.

The market's concern is whether the Trump administration can put the investigation behind it and revive momentum for its agenda of lower taxes and looser regulations.

Bets on that agenda are partly behind a rally, which has driven stock indexes to record highs.

Chipmaker Nvidia rose 2.6 percent after brokerages reiterated their bullish view on the stock. The stock was the biggest boost on the Nasdaq.

DuPont Fabros Technology jumped 13 percent to $62.55 after Digital Realty Trust said it would buy the fellow data center operator for an enterprise value of about $7.6 billion.

Advancing issues outnumbered decliners on the NYSE by 1,671 to 1,003. On the Nasdaq, 1,644 issues rose and 965 fell.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Anil D'Silva)