Wall Street rally builds on trade optimism

By Medha Singh

(Reuters) - Technology and industrial stocks powered Wall Street's rise on Friday, setting the three main indexes on track for their fourth week of gains, amid growing optimism that the United States and China would resolve their bitter trade dispute.

U.S. stocks steadily extended gains after a Bloomberg report said China had offered to go on a six-year buying spree to ramp up U.S. imports in order to reconfigure the relation between the two countries.

This follows another report on Thursday that said U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. A Treasury spokesman denied Mnuchin had made any such recommendation.

Trade-sensitive industrials stocks rose 2.26 percent, the most among S&P sectors, while the Philadelphia SE semiconductor index climbed 2.87 percent. A 1.68 percent rise in technology sector was the biggest boost to S&P 500.

All of the 11 major S&P indexes and the 30 Dow members were higher.

"There seems to be more goodwill on both sides now. If there is any hint of concessions on tariffs or progress in talks, those gestures alone will send the stock market sky-rocketing," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

Schlumberger jumped 7.87 percent after the world's largest oilfield services provider's quarterly revenue beat estimates.

The energy sector, which is the best performing S&P sector so far in 2019, rose 1.66 percent, also boosted by higher oil prices.

At 12:27 a.m. EDT the Dow Jones Industrial Average was up 365.86 points, or 1.50 percent, at 24,735.96, the S&P 500 was up 39.16 points, or 1.49 percent, at 2,675.12 and the Nasdaq Composite was up 98.29 points, or 1.39 percent, at 7,182.76.

Cardillo said growing enthusiasm over trade talks was adding to a potential "January effect," when stocks that were sold in December for year-end tax purposes bounced back.

A strong rally in January has put the benchmark index on track for its best monthly gain since March 2016 and about 10 percent away from its Sept. 20 record close after hitting a 20-month low on Christmas Eve.

Adding to the upbeat mood, latest data showed U.S. manufacturing output increased by the most in 10 months in December, which could allay fears of a sharp slowdown in factory activity.

One disappointment was Netflix Inc, which fell 1.61 percent as investors looked past its record subscriber numbers and instead focused on its lower-than-expected revenue forecast for the first quarter.

Rest of the FAANG members, which will report their quarterly results in the coming weeks, rose between 0.7 percent and 2.4 percent.

Earnings season picks up pace with 11 percent of S&P 500 companies having already posted fourth-quarter results and another 12 percent due to report results in the upcoming holiday-shortened week.

Analysts have lowered their fourth-quarter earnings forecast for S&P 500 companies to 14.2 percent from 20.1 percent estimated on Oct. 1, according to IBES data from Refinitiv.

Advancing issues outnumbered decliners by a 3.56-to-1 ratio on the NYSE and by a 2.79-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 26 new highs and 14 new lows.

(Reporting by Medha Singh in Bengaluru; additional reporting by Shreyashi Sanyal; Editing by Arun Koyyur and Anil D'Silva)