US STOCKS-S&P 500 hits all-time high on trade optimism, rate cut hopes

(For a live blog on the U.S. stock market, click LIVE/ or
type LIVE/ in a news window.)
* S&P 500 at all-time high, Nasdaq inches closer to record
* Microsoft rises on Pentagon contract win
* Tiffany surges on LVMH's $120/share offer
* Spotify gains after surprise quarterly profit
* Indexes up: Dow 0.28%, S&P 0.50%, Nasdaq 0.96%

(Updates to early afternoon)
By Arjun Panchadar
Oct 28 (Reuters) - Technology stocks propelled the benchmark
S&P 500 index to an all-time high, while the Nasdaq hovered
below its record level, as a possible U.S.-China trade deal and
rising bets on a third rate cut by the Federal Reserve fueled
optimism.
Shares of Microsoft Corp MSFT.O gained 2% and were among
the biggest boost to all three major indexes after the
technology giant won the Pentagon's $10 billion cloud computing
contract, beating Amazon.com Inc AMZN.O . The S&P 500 rose as much as 0.7% to 3,044.08, breaching the
record level hit in July, while the Nasdaq was less than 0.5%
below its all-time high. The Dow Jones Industrial Average was
more than 1% away from its record high.
President Donald Trump said on Monday he expected to sign a
significant part of the trade deal with China ahead of schedule
but did not elaborate on the timing. That added to Friday's optimism when Washington said it was
"close to finalizing" some parts of a trade agreement with
China. "Most of the things that have been worrying markets haven't
necessarily been resolved but the concern about them has waned a
little bit," said Randy Frederick, vice president of trading and
derivatives for Charles Schwab in Austin.
"In general, it is more of a lack of bad news than it is an
abundance of good news."
The news comes as a relief to investors who have been
reeling from the impact of the trade war and its fallout on the
domestic economy.
Adding to the upbeat mood, the Fed is expected to widely cut
interest rates at its two-day policy meeting, which ends on
Wednesday.
The odds for a quarter percentage point cut in U.S.
borrowing costs have jumped to 95% from 49% last month,
according to CME Group's FedWatch tool.
The third-quarter earnings season has managed to ease some
concerns related to the impact of the trade tensions on
Corporate America, with over 78% of the 204 S&P 500 companies
that have reported so far surpassing profit expectations,
according to Refinitiv data.
Investors are now waiting for earnings from heavyweights
this week, including Apple Inc AAPL.O , Alphabet Inc GOOGL.O
and Merck & Co Inc MRK.N .
Chipmakers, which have a sizable exposure to China, gained
helping the Philadelphia SE Semiconductor index .SOX rise
1.6%. The technology .SPLRCT , healthcare .SPXHC and
communication services .SPLRCL sectors gained more than 1%
each.
"We're likely to hold at a high today and may just float
around sideways for a while," Frederick added.
At 1:00 p.m. ET, the Dow Jones Industrial Average .DJI was
up 74.92 points, or 0.28%, at 27,032.98, the S&P 500 .SPX was
up 15.24 points, or 0.50%, at 3,037.79 and the Nasdaq Composite
.IXIC was up 78.83 points, or 0.96%, at 8,321.95.
Among other stocks, AT&T Inc T.N rose about 4% 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. Tiffany & Co TIF.N surged about 31% after Louis Vuitton
owner LVMH LVMH.PA made a $120 per share offer to buy the U.S.
luxury jeweler. Spotify Technology SA SPOT.N gained about 14.47% after the
music streaming company posted a surprise quarterly profit and
beat revenue estimates. Advancing issues outnumbered decliners by a 1.48-to-1 ratio
on the NYSE and by a 2.23-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and no new lows,
while the Nasdaq recorded 104 new highs and 30 new lows.