US STOCKS-Wall St scales fresh highs on tech earnings, US-China trade optimism

By Sinéad Carew and Pranav Kashyap

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

U.S. President Donald Trump and his Chinese counterpart Xi Jinping are due to 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.

During weekend TV appearances, U.S. Treasury Secretary Scott Bessent had talked about agreements around China buying U.S. soybeans and its rare-earth exports after two days of trade talks in Malaysia.

Bessent's comments boosted hopes for easing U.S.-China tensions, said Scott Wren, senior global market strategist at Wells Fargo Investment Institute in St. Louis, Missouri.

Earnings from five of the heavyweight " Magnificent Seven " group - 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 market's rally, which has largely depended on optimism around growth and capital expenditures related to artificial intelligence.

"With five of the Mag Seven reporting this week, what the market expects to hear is confirmation that all this AI CapEx is coming through, that the revenues and profits from AI are coming through," said Wren.

As of 2:12 p.m. ET, the Dow Jones Industrial Average .DJI rose 214.35 points, or 0.45%, to 47,421.47. The S&P 500 .SPX gained 69.51 points, or 1.02%, at 6,861.20 and the Nasdaq Composite .IXIC climbed 400.31 points, or 1.72%, to 23,604.75.

Among the S&P 500's 11 major sectors, communication services .SPLRCL, consumer discretionary .SPLRCD and technology .SPLRCT all rallied sharply while the laggards were materials .SPLRCM and consumer staples .SPLRCS.

The Philadelphia SE Semiconductor index .SOX hit a fresh record high and was last up 2.5%. Qualcomm QCOM.O shares surged about 13% after it unveiled two AI chips for data centers, with commercial availability from next year. AI chip leader Nvidia NVDA.O rose 2.5%.

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%, while Baidu BIDU.O added 5%.

FED RATE CUT FULLY PRICED IN

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

Among individual stocks, Tesla TSLA.O was up 5.7% and was the S&P 500's second biggest boost behind Nvidia.

Keurig Dr Pepper KDP.O jumped 7% 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 rose 2% after the company announced a partnership with the National Football League to launch an apparel collection.

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

YPF YPF.N gained 22.5%, Grupo Supervielle SUPV.N surged 47%, and Banco Macro BMA.N rose 37%. Grupo Financiero Galicia GGAL.O and Banco BBVA Argentina BBAR.N advanced around 40%.

Janus Henderson JHG.N jumped nearly 13% after confirming an acquisition proposal from Trian and General Catalyst.

Advancing issues outnumbered decliners by a 1.38-to-1 ratio on the NYSE where there were 529 new highs and 63 new lows.

On the Nasdaq, 2,482 stocks rose and 2,137 fell as advancing issues outnumbered decliners by a 1.16-to-1 ratio. The S&P 500 posted 34 new 52-week highs and three new lows while the Nasdaq Composite recorded 123 new highs and 48 new lows.