(Updates with late afternoon trading)
* Applied Materials soars after forecast, lifting tech
* Deere, Campbell Soup fall after results, outlook
* Investors absorb potential June rate hike after volatile week
* Indexes up: Dow 0.4 pct, S&P 0.61 pct, Nasdaq 1.19 pct
By Lewis Krauskopf
May 20 (Reuters) - Wall Street rallied on Friday, led by tech stocks on the back of Applied Materials' profit forecast, ending a volatile week on a positive note.
The S&P 500 looked set to eke out gains for the week after three straight weeks of losses, with the Nasdaq on pace to snap a four-week losing streak.
The tech sector led the way on Friday, lifted by a higher-than-expected profit forecast from chip company Applied Materials, which rose 13.6 percent.
The Federal Reserve surprised investors when the central bank's minutes, released on Wednesday, opened the door to a rate increase in June and roiled financial markets.
Traders now give a 30-percent chance of a rate hike at the Fed's June meeting, according to the CME FedWatch tool, about twice as high as they expected on Tuesday.
"The market is starting to come to grips with the Fed potentially moving in June," said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina. "I think it's potentially a positive dynamic if the market can actually go up in the face of the Fed probability going up."
The Dow Jones industrial average was up 69.31 points, or 0.4 percent, at 17,504.71, the S&P 500 gained 12.53 points, or 0.61 percent, at 2,052.57 and the Nasdaq Composite added 56.31 points, or 1.19 percent, at 4,768.84.
Nine of ten S&P sectors were in positive territory in afternoon trading.
The S&P is marginally positive for 2016. The benchmark index has rebounded some 13 percent off of February lows, but is little changed in recent weeks amid mixed corporate earnings and economic data.
Data on Friday showed U.S. home resales rose more than expected in April, suggesting the economy continues to gather pace during the second quarter.
In other corporate results, Deere shares fell 4.9 percent to $78.21. The farm equipment maker cut its profit outlook again and reported a decline in quarterly earnings.
Campbell Soup shares tumbled 6.2 percent to $59.99 after disappointing sales.
InterOil shares jumped 37.4 percent to $43.50 after Australia's Oil Search Ltd agreed a $2.2 billion deal to acquire the company.
Advancing issues outnumbered declining ones on the NYSE by 2,373 to 618, for a 3.84-to-1 ratio on the upside; on the Nasdaq, 2,191 issues rose and 593 fell for a 3.69-to-1 ratio favoring advancers.
The S&P 500 posted 12 new 52-week highs and 1 new lows; the Nasdaq recorded 31 new highs and 22 new lows. (Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)