US STOCKS-S&P 500 set to open at record high on trade optimism, rate cut hopes

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* S&P 500 set to open at record high
* Microsoft gains on Pentagon cloud contract win
* Tiffany surges on LVMH's $14.5 bln bid
* Futures up: Dow 0.44%, S&P 500 0.36%, Nasdaq 0.43%

(Adds comments, updates market action)
By Arjun Panchadar
Oct 28 (Reuters) - The S&P 500 index was set to open at a
record high on Monday as hopes of a U.S.-China trade deal and
rising bets on a rate cut by the Federal Reserve brightened
investor sentiment.
The three main indexes could get a boost from Microsoft Corp
MSFT.O , whose shares were up 2.6% in premarket trading after
the technology giant won the Pentagon's $10 billion cloud
computing contract, beating Amazon.com Inc AMZN.O . Amazon
shares slipped 0.7%. At 8:49 a.m. ET, the S&P 500 e-minis EScv1 rose 0.36% to
hit a record high of 3,031.25.
The benchmark index .SPX had come within striking distance
of its all-time high on Friday after the United States said it
was "close to finalizing" some parts of a trade agreement with
China. The other two major indexes are more than 1% below their
record levels.
Beijing confirmed on Saturday that "technical consultations"
on some parts of the agreement were basically completed.
"Markets seem convinced the first deal will get done and
that negotiations are progressing on the next deal," said Edward
Moya, senior market analyst at Oanda.
The news comes as a relief to investors who have been
grappling with the fallout from the trade war and its impact on
the global economy.
Dismal domestic economic indicators since the beginning of
October have raised the odds for a quarter percentage point cut
in U.S. borrowing costs to 94% from 49% last month.
The Fed will announce its policy decision at the end of its
two-day meeting on Wednesday.
"Stocks could also be supported on expectations that the Fed
will deliver a third consecutive (rate cut) and remain data
dependent if more are warranted," Moya added.
The Dow e-minis 1YMcv1 were up 0.44% while the Nasdaq 100
e-minis NQcv1 gained 34.5 points, or 0.43%.
The third-quarter earnings season has managed to allay some
of the concerns related to the impact of trade tensions on
Corporate America, with over 78% of the 199 S&P 500 companies
that have reported so far surpassing profit expectations.
All eyes will now be on earnings from heavyweights this
week, including Apple Inc AAPL.O , Alphabet Inc GOOGL.O and
Merck & Co Inc MRK.N .
Among other stocks, Tiffany & Co TIF.N surged 31.2% after
Louis Vuitton owner LVMH LVMH.PA made a $120 per share offer
to buy the U.S. luxury jeweler at a time when it grapples with
the impact of tariffs on its exports to China. AT&T Inc T.N rose 1.6% after the U.S. wireless carrier
said it would add two new board members and consider selling off
up to $10 billion worth of non-core businesses next year, bowing
to pressure from activist investor Elliott Management.
Spotify Technology SA SPOT.N gained 8.4% after the music
streaming company posted a surprise quarterly profit and beat
revenue estimates as it added more-than-expected paid
subscribers for its premium service.