US STOCKS-Wall St rises on stimulus bets as economic recovery cools

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* Weekly jobless claims stall at recession levels
* Consumer spending rises 1% in August
* Airlines head higher on coronavirus aid hopes
* Tech heavyweights boost all three indexes
* Indexes up: Dow 0.51%, S&P 0.62%, Nasdaq 1.08%

(Updates to early afternoon)
By Devik Jain and Sagarika Jaisinghani
Oct 1 (Reuters) - Wall Street's main indexes rose on the
first day of the fourth quarter on Thursday as investors bet in
favor of more fiscal stimulus after data showed the pace of a
domestic economic rebound was slowing.
Nine of the 11 major S&P sectors were higher, although gains
were led by real estate .SPLRCR and utilities .SPLRCU ,
pointing to a broader risk-off mood.
The consumer discretionary index .SPLRCD , which houses
Amazon.com Inc AMZN.O , and the information technology sector
.SPLRCT also gained as investors flocked to stocks considered
relatively safe during heightened economic uncertainty.
"Markets are fairly optimistic this morning about the
potential for that stimulus package," said Chad Oviatt, director
of investment management for Huntington Private Bank in
Columbus, Ohio.
"They are looking for a deal to be done (but) the question
becomes, is it just posturing or there is actually a deal in the
works?"
Aggressive monetary and fiscal stimulus partly powered a
Wall Street rebound since a coronavirus-driven crash in March,
but the S&P 500 posted monthly declines in September as economic
data pointed at a long road to pre-pandemic levels.
Data on Thursday showed weekly jobless claims remained at
recession levels, while personal income dropped in August,
underscoring the need for another government rescue package for
businesses and the unemployed. House Speaker Nancy Pelosi and Treasury Secretary Steven
Mnuchin were expected to try again on Thursday to reach a deal
on COVID-19 relief legislation. Pelosi said she believed
Democratic lawmakers and the White House were close to agreeing
on the size of a bill. Shares of major U.S. airlines .DJUSAR headed higher as
White House Press Secretary Kayleigh McEnany said the Trump
administration was open to standalone legislation to help the
industry ride out the recession. With the presidential election now less than five weeks
away, analysts have warned of higher volatility over the next
few weeks.
"Volatility is going to come back in a big way, as opposed
to the second quarter, when we were able to just forget
everything and pile money into the market," said Kim Forrest,
chief investment officer at Bokeh Capital Partners in
Pittsburgh.
At 12:49 p.m. ET, the Dow Jones Industrial Average .DJI
was up 0.51%, the S&P 500 .SPX was up 0.62% and the Nasdaq
Composite .IXIC was up 1.08%.
Exxon Mobil Corp XOM.N slipped 3.4% after it signaled a
bigger-than-expected loss in the third quarter as the U.S. oil
major struggles to cope with the effects of a pandemic-driven
downturn in the energy industry. The wider energy index .SPNY tumbled another 2.8% after a
20% decline in the third quarter. Healthcare .SPXHC was the
only other major S&P sector in the red.
Boeing Co BA.N rose 1.5% a day after Federal Aviation
Administration Chief Steve Dickson conducted a 737 MAX test
flight, a milestone for the jet to win approval to resume flying
after two fatal crashes. Advancing issues outnumbered decliners 2.13-to-1 on the NYSE
and 1.57-to-1 on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new low,
while the Nasdaq recorded 55 new highs and 30 new lows.