Wall St set for new record highs; S&P 500 eyes 1,800 level

By Angela Moon

NEW YORK (Reuters) - The Dow and the S&P 500 were set for fresh record highs on Friday, buoyed by reassuring remarks by Federal Reserve chair nominee Janet Yellen that the central bank's accommodative policies would continue.

Wall Street rallied Thursday, with the S&P 500 ending just 10 points away from 1,800, its next level of potential resistance, in the wake of Yellen's comments. The Fed's massive stimulus measures have helped prop up the economy and equity markets for much of the year.

"The post-Yellen rally seems to be continuing but with the S&P 500 within the range of 1,800, the market will be a bit bumpy as we approach that," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Data showed New York state's manufacturing sector unexpectedly shrank this month, but business optimism remained resilient. The market barely reacted to the report.

In premarket trading, Exxon Mobil Corp rose 1.3 percent, a day after Warren Buffett's Berkshire Hathaway Inc disclosed a new $3.45 billion stake in the world's largest publicly traded oil company.

S&P 500 futures rose 3.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 32 points and Nasdaq 100 futures added 4.5 points.

Bank shares could be in the spotlight after Moody's Investors Service cut the long-term debt ratings of Morgan Stanley , Goldman Sachs Group Inc , JPMorgan Chase & Co and Bank of New York Mellon Corp by one notch late Thursday, concluding that the government wouldn't bail out the institutions if they fail.

Top U.S. hedge fund managers zoned in on the consumer sector in the third quarter, with investment plays ranging from luxury auction house Sotheby's to struggling department store chain J.C. Penney Co . J.C. Penney shares were up 1.7 percent and Sotheby's shares rose 1.5 percent in premarket trading.

Following Twitter 's trading debut on the New York Stock Exchange on November 7, options market makers begin pricing and trading contracts Friday to buy or sell Twitter shares at various prices in the future.

Jos. A. Bank Clothiers Inc terminated its offer to buy Men's Wearhouse Inc , sending Men's Wearhouse shares down 1.3 percent in premarket trading, although Jos. A. Bank did not rule out another bid for its larger rival in future.

European shares rose back towards five-year highs on Friday, buoyed by prospects for a further dose of accommodative central bank policies that were tipped to keep the equity rally on track.

The Dow and the S&P 500 index ended at new highs on Thursday after Janet Yellen said the Fed's accommodative policies would continue as long as the economy remains fragile.

(Editing by Bernadette Baum)