US STOCKS-Wall St scales fresh highs as busy week for tech and trade kicks off

By Pranav Kashyap and Twesha Dikshit

Oct 27 (Reuters) - Wall Street's main indexes notched record highs on Monday as excitement around a potential U.S.-China trade deal set the tone for a week packed with Big Tech earnings and a widely expected interest rate cut.

Earnings from "Magnificent Seven" members Microsoft MSFT.O, Apple AAPL.O, Alphabet GOOGL.O, Amazon AMZN.O, and Meta META.O later this week will test the endurance of the AI rally. The five megacaps gained between 1% and 3%.

President Donald Trump and China's Xi Jinping will meet on Thursday to decide on a framework that could pause tougher U.S. tariffs and China's rare-earth export curbs, easing market jitters around a trade war and sending Wall Street's "fear gauge" VIX .VIX down to a one‑month low.

U.S.-listed shares of Chinese companies gained on Monday. Alibaba Group Holding BABA.N, JD.com JD.O and PDD Holdings PDD.O rose more than 2% each, while Baidu BIDU.O added 4.8%.

"Markets just want to be positive. Investors want a reason to buy and they see that reason in whether it's lower rates, trade deals, decent earnings or the continued dominance of the AI trade," said Melissa Brown, managing director of investment decision research at SimCorp.

At 11:21 a.m. ET, the Dow Jones Industrial Average .DJI rose 199.11 points, or 0.42%, to 47,406.23, the S&P 500 .SPX gained 60.43 points, or 0.89%, to 6,852.12 and the Nasdaq Composite .IXIC gained 353.95 points, or 1.54%, to 23,560.95.

Qualcomm QCOM.O surged 15% after unveiling two artificial intelligence chips for data centers, with commercial availability from next year. AI chip leader Nvidia NVDA.O rose 2.7%.

Tech stocks .SPLRCT added 1.4% and the Philadelphia SE Semiconductor index .SOX hit a fresh record high.

"To justify the valuations, we are going to have to see exceedingly good earnings. There's a lot of expectation that those earnings are going to be good," Brown said.

FED RATE CUT FULLY PRICED IN

Cooler inflation data last week all but sealed bets for a 25-basis-point rate reduction from the Federal Reserve on Wednesday, and investors will closely monitor Chair Jerome Powell's comments for clues on a December cut, as the government shutdown hinders key data releases.

The rate-sensitive Russell 2000 .RUT rose 0.3%, hovering close to record highs.

Among other stocks, Keurig Dr Pepper KDP.O jumped 6.8% after lifting its annual sales forecast and raising about $7 billion to finance its purchase of Dutch coffee giant JDE Peet's.

Lululemon LULU.O shares were up 3.1% after the company announced a partnership with NFL to launch an apparel collection.

U.S.-listed shares Of Argentine companies jumped after President Javier Milei's election victory.

YPF YPF.N gained 30%, while Grupo Supervielle SUPV.N surged 50%, and Banco Macro BMA.N and Grupo Financiero Galicia GGAL.O advanced 40% each while Banco BBVA Argentina BBAR.N rose 45%.

Janus Henderson JHG.N jumped 13.5% after confirming an acquisition proposal from Trian and General Catalyst.

Advancing issues outnumbered decliners by a 1.49-to-1 ratio on the NYSE and by a 1.23-to-1 ratio on the Nasdaq.

The S&P 500 posted 28 new 52-week highs and three new lows while the Nasdaq Composite recorded 109 new highs and 34 new lows.