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Wall Street aims for fourth day of gains on trade hopes

(Reuters) – U.S. stocks rose modestly on Wednesday, angling for a fourth day of gains led by technology and other trade-sensitive sectors following signs of progress in trade talks between the United States and China.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019. REUTERS/Brendan McDermid

Hopes of a deal between the world’s two largest economies that could avert an escalation of ongoing trade tensions, plus strong data on the U.S. job market and indications the Federal Reserve now appears to be in no rush to lift interest rates further, have helped lift the S&P 500 .SPX 9.7 percent from the 20-month low it hit around Christmas.

China pledged to purchase “a substantial amount” of agricultural, energy and manufactured goods and services from the United States, the U.S. Trade Representative’s office said as talks wrapped up in Beijing.

The S&P technology index .SPLRCT rose 1.11 percent, boosted by Microsoft Corp (MSFT.O), Apple Inc (AAPL.O) and chipmakers.

Shares of Boeing Co (BA.N), which has a large exposure to China, were up 1.2 percent, with the S&P industrial index .SPLRCI gaining 0.56 percent.

“There’s a solid uptrend that’s come off the Christmas Eve downturn. So any development that looks like it might be leading to an eventual resolution will be helpful to the markets,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The CBOE Volatility index .VIX, often referred to as an investor fear gauge, dropped half-a-point to a one-month low of 20.2.

At 11:34 a.m. ET, the Dow Jones Industrial Average .DJI was up 98.49 points, or 0.41 percent, at 23,885.94 and the S&P 500 .SPX was up 8.45 points, or 0.33 percent, at 2,582.86. The Nasdaq Composite .IXIC was up 43.99 points, or 0.64 percent, at 6,940.99.

Apple Inc (AAPL.O) rose 1.4 percent despite a Nikkei report that the company had reduced planned production for its three new iPhone models for the January-March quarter.

The company’s shares tumbled about 10 percent last week after the iPhone maker warned on holiday quarter sales and its suppliers, which largely include chipmakers, took another beating on Tuesday after Samsung Electronics (005930.KS) flagged weak chip demand.

The broader Philadelphia Semiconductor index .SOX gained about 2.32 percent.

Financial stocks .SPSY were up 0.31 percent, ahead of the release of Fed’s minutes from its December meeting.

A clutch of Fed officials said they would be cautious about any further increases in interest rates so that the central bank could assess growing risks to an otherwise solid U.S. economic outlook.

“I do think that a more stable Fed is going to lead to more stable markets over time,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania.

“Some of the sharp moves in the market were driven by the fact that Fed tightening is starting to have an impact on economic growth and financial conditions.”

Shares in Constellation Brands Inc (STZ.N) dropped 9.6 percent, dragging down the consumer staples index .SPLRCS, after the Corona brewer cut its fiscal 2019 profit outlook.

Advancing issues outnumbered decliners by a 2.07-to-1 ratio on the NYSE and by a 1.63-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and one new lows, while the Nasdaq recorded 19 new highs and 5 new lows.

Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila

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