US STOCKS-Microsoft nudges S&P 500 toward record high

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* Microsoft gains on $40 bln share buyback plan
* Healthcare stocks among top boosts to S&P 500
* U.S.-China low-level trade talks resume on Thursday
* Indexes: Dow -0.04%, S&P 500 +0.14%, Nasdaq +0.19%

(Updates to afternoon)
By Noel Randewich
Sept 19 (Reuters) - Microsoft and healthcare companies
lifted Wall Street on Thursday, a day after the Federal Reserve
cut interest rates as expected and left the door open for
further monetary easing.
Microsoft MSFT.O rose 1.9% after unveiling a $40 billion
stock buyback plan, and its increase contributed more than any
other company to the S&P 500's gain. The S&P 500 was less than 1% below its record high close
from July as markets also became more optimistic about talks
between U.S. and Chinese deputy trade negotiators aimed at
laying the groundwork for high-level negotiations in early
October. A recent easing in trade tensions has helped the three main
indexes recover from losses from August.
"There has been slightly more constructiveness lately, but
if there is any sort of agreement, it will be a very light,
mini-deal, because the U.S. and China are still very far apart
on the main issues," warned Ben Phillips, Chief Investment
Officer at EventShares.
The S&P 500 healthcare index .SPXHC climbed 0.7% after
U.S. House Speaker Nancy Pelosi released a proposal on drug
pricing policy.
The plan is a "big negative" for drugmakers and the stock
reaction has already been priced in to some degree, said Thomas
Martin, senior portfolio manager at GLOBALT Investments.
Of 11 sector indexes, healthcare is the worst performer in
2019, with a gain of 6%.
On Wednesday, the Fed announced a quarter percentage point
cut in interest rates for the second time this year and said
future reductions would be "largely data-dependent."
Traders see a nearly 50% chance for another 25 basis point
rate cut in October, according to CME Group's FedWatch tool.
"The market just continues to believe the Fed is going to be
accommodative," said Robert Pavlik, chief investment strategist
and senior portfolio manager at SlateStone Wealth LLC in New
York.
The Fed injected another $75 billion into the U.S. banking
system on Wednesday, restoring a measure of order after the
central bank's benchmark interest rate rose above its targeted
range for the first time since the financial crisis.
At 2:56 p.m. ET, the Dow Jones Industrial Average .DJI was
down 0.04% at 27,137.17 points, while the S&P 500 .SPX gained
0.14% to 3,010.94.
The Nasdaq Composite .IXIC added 0.19% to 8,193.29.
With the S&P 500 approaching a record high, the benchmark
index is trading at about 17 times expected earnings, up from
about 15 at the end of last year, according to Refinitiv's
Datastream.
"Corporate earnings continue to expand, albeit at a slower
pace, and we expect that to continue into 2020," said Bill
Northey, senior investment director for U.S. Bank Wealth
Management. "We view valuations as high, but not extreme at this
point. It's not something that's causing us to wring our hands."
Shares of retailer Target Corp TGT.N rose 0.8% after it
announced a $5 billion share buyback plan. Advancing issues outnumbered declining ones on the NYSE by a
1.64-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored advancers.
The S&P 500 posted 25 new 52-week highs and 1 new lows; the
Nasdaq Composite recorded 63 new highs and 32 new lows.