US STOCKS-Wall St rises after US-Britain trade deal boosts market confidence

By Purvi Agarwal and Johann M Cherian

May 8 (Reuters) - Wall Street's main indexes climbed more than 1% each on Thursday as investors assessed a new trade agreement between the United States and Britain, the first such trade deal the U.S. has signed after President Donald Trump paused tariffs last month.

Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods as part of the deal, while a 10% baseline tariff on goods imported from the UK into the U.S. remains in place.

Airline stocks jumped after the U.S.-UK agreement exempted plane parts made by Rolls-Royce RR.L from tariffs, with the S&P Passenger Airlines Index .SPLRCALI up 5.3%.

U.S. Commerce Secretary Howard Lutnick said the UK would buy $10 billion of Boeing BA.N aircraft , sending the planemaker's shares up 3.5%.

Trump said he expects substantive negotiations between the U.S. and Beijing on the trade front this weekend. He also said tariffs on Chinese imports could not get higher than 145%.

"This is what the market has been looking for... some sort of a breakthrough. This does not put to rest some of the uncertainties regarding the trade war effects, but it's a start," said Peter Cardillo, chief market economist at Spartan Capital Securities.

At 11:56 a.m. ET, the Dow Jones Industrial Average .DJI rose 516.11 points, or 1.26%, to 41,630.08, the S&P 500 .SPX gained 68.03 points, or 1.21%, to 5,699.31, and the Nasdaq Composite .IXIC gained 280.94 points, or 1.58%, to 18,019.10.

Energy stocks .SPNY led gains among the S&P 500's 11 sectors with a 2.4% rise, tracking a jump in crude prices.

The domestically focused Russell 2000 small-cap index .RUT added 2% and touched a more than one-month high. Most megacap and growth stocks were higher, with Tesla TSLA.O leading gains with a 4.7% rise.

Semiconductor stocks <.SOX> inched 1.9% higher, building on the previous session's gains after a spokesperson said the Trump administration was planning to rescind and modify a rule that curbed the export of sophisticated artificial-intelligence chips.

The U.S. Federal Reserve held interest rates steady on Wednesday and flagged heightened risks of inflation and unemployment, further clouding the economic outlook for the world's largest economy.

Traders now see a rate cut only by September and are pricing in a total of 73 basis points of lowering by 2025-end, according to data compiled by LSEG.

On the data front, jobless claims fell more than expected last week, suggesting the labor market continued to chug along.

Among others, U.S.-listed shares of Arm ARM.O plunged 4.8% after the chipmaker forecast first-quarter revenue and profit below Wall Street estimates.

Tapestry TPR.N added 4.1% after the luxury group raised its annual forecasts, while Fortinet FTNT.O slumped 8.2% after the cybersecurity firm's second-quarter revenue forecast came in below estimates.

Warner Bros. Discovery WBD.O gained 4.9% after a report said the company was headed for a split. The streaming firm missed its quarterly revenue estimates.

Krispy Kreme's DNUT.O shares sank more than 24% after the restaurant chain became the latest to withdraw its full-year forecast.

Advancing issues outnumbered decliners by a 3.04-to-1 ratio on the NYSE, and by a 2.39-to-1 ratio on the Nasdaq.

The S&P 500 posted 17 new 52-week highs and four new lows, while the Nasdaq Composite recorded 43 new highs and 79 new lows.