US STOCKS-Wall Street pushes higher on trade hopes, dovish Fed bets

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* Trump says trade talks to restart, will meet Xi
* Tech boosts S&P; trade-sensitive industrials jump
* Defensive stocks decline among 11 S&P sectors
* Two-day Fed policy meeting in focus
* Indexes up: Dow 1.34%, S&P 1.09%, Nasdaq 1.57%

(Updates to early afternoon)
By Shreyashi Sanyal and Aparajita Saxena
June 18 (Reuters) - Wall Street's main indexes 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 1.72%, while
technology stocks .SPLRCT gained 1.84%, 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 4.23%.
"It's quite clear now that this is a major potential
headwind for markets and any positive sounding news like this
will likely inspire relief rallies," said Craig Erlam, senior
market analyst at OANDA in London.
"That's not to say talks will be successful but investors
may be feeling more optimistic this morning than they were a day
ago."
The drawn out U.S.-China 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 hold 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 European Central Bank President Mario
Draghi's comments indicating a possibility of fresh rate cuts or
asset purchases. At 12:56 p.m. ET, the Dow Jones Industrial Average .DJI
was up 350.68 points, or 1.34%, at 26,463.21 and the S&P 500 was
up 31.46 points, or 1.09%, at 2,921.13.
The Nasdaq Composite .IXIC was up 122.95 points, or 1.57%,
at 7,967.98.
Large-cap favorites such as Apple Inc AAPL.O , Amazon.com
Inc AMZN.O , Microsoft Corp MSFT.O rose between 1.5% and
2.5%, lifting the Nasdaq higher.
Boeing Co BA.N jumped 4.20%, buoying the Dow, after the
planemaker received an order for its grounded 737 MAX jets
valued at more than $24 billion at list prices.
Only the defensive utilities .SPLRCU , real estate
.SPLRCR and consumer staples .SPLRCS sectors were the
decliners.
Advancing issues outnumbered decliners by a 3.33-to-1 ratio
on the NYSE and by a 2.78-to-1 ratio on the Nasdaq.
The S&P index recorded 57 new 52-week highs and one new low,
while the Nasdaq recorded 77 new highs and 33 new lows.