US STOCKS-Trade optimism, dovish Fed bets power Wall Street rally

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* Trump says trade talks to restart, will meet Xi
* Tech boosts S&P; trade-sensitive industrials jump
* Two-day Fed policy meeting in focus
* Indexes up: Dow 1.43%, S&P 1.30%, Nasdaq 1.90%

(Updates prices, adds comments)
By Shreyashi Sanyal
June 18 (Reuters) - U.S. stocks rallied on Tuesday, with the
S&P 500 inching close to record levels, as President Donald
Trump's comments on restarting trade talks with China added to
optimism of a more accommodative Federal Reserve.
Trump said he would meet with Chinese President Xi Jinping
at the G20 summit later this month, and that talks between the
two countries would restart after a long lull. Trade-sensitive industrials .SPLRCI jumped 1.92% on the
development, while technology stocks .SPLRCT gained 2.08%, the
biggest boost to the benchmark index .SPX .
Chip companies, which have a sizable revenue exposure to
China, led the rally among tech stocks, with the Philadelphia
Semiconductor index .SOX surging 4.67%.
"Trump's meeting with Xi was really what the markets had
been hoping for to restart the trade negotiations. Right now the
conversation is headed in a direction that's removing the fear
of a trade war," said Robert Pavlik, chief investment strategist
and senior portfolio manager at SlateStone Wealth LLC in New
York.
The prolonged trade war and its impact on economic growth
had investors betting that the Fed would cut rates to preserve
the current U.S. economic expansion, which would be the longest
on record this summer.
The central bank is expected to leave interest rates
unchanged at its two-day policy meeting ending Wednesday, but is
widely seen as laying the foundation for a cut later this year.
The Fed is scheduled to release its statement at 2 p.m. EDT
(1800 GMT) on Wednesday and Chairman Jerome Powell will address
a press conference shortly after. The S&P 500 has gained 5% so far this month on rate cut
expectations, putting the benchmark index just 1% away from its
all-time high hit in early May.
"Fed's main task will be the same as always: Carefully craft
its language as to not disappoint markets. 'Yes, we may not cut
right away, but don't worry, anything goes wrong we'll be right
there to save you'," said Craig Kirsner, president at Stuart
Estate Planning Wealth Advisors in Coconut Creek, Florida.
Lifting sentiment was ECB President Mario Draghi's comments
indicating a possibility of fresh rate cuts or asset purchases.
At 11:16 a.m. ET, the Dow Jones Industrial Average .DJI
was up 372.66 points, or 1.43%, at 26,485.19 and the S&P 500
.SPX was up 37.43 points, or 1.30%, at 2,927.10.
The Nasdaq Composite .IXIC was up 149.21 points, or 1.90%,
at 7,994.24.
Large-cap favorites such as Facebook Inc FB.O , Apple Inc
AAPL.O , Amazon.com Inc AMZN.O , Microsoft Corp MSFT.O rose
between 1.5% and 3%, the biggest boost to the Nasdaq.
Boeing Co BA.N gained 2.8%, lifting the Dow, after the
planemaker received an order for its 737 MAX jets, which have
been grounded, valued at more than $24 billion at list prices.
Facebook climbed 1.09% after it revealed plans to launch a
cryptocurrency called Libra, the latest development in its
effort to expand beyond social networking and move into
e-commerce and global payments. Only the defensive utilities .SPLRCU , real estate
.SPLRCR and consumer staples .SPLRCS sectors were among the
decliners.
Advancing issues outnumbered decliners by a 4.83-to-1 ratio
on the NYSE and by a 3.80-to-1 ratio on the Nasdaq.
The S&P index recorded 53 new 52-week highs and one new low,
while the Nasdaq recorded 71 new highs and 25 new lows.