March 1, 2019 / 8:06 PM / 6 months ago

US STOCKS-Wall Street rises as trade optimism counters weak data

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* S&P and Dow set to snap 3-day losing streak

* Feb U.S. manufacturing, consumer sentiment miss view

* Gap soars on Old Navy split news, Foot Locker jumps

* Indexes up: Dow 0.43 pct, S&P 0.61 pct, Nasdaq 0.8 pct (Updates to late afternoon, adds commentary, changes byline, adds New York dateline)

By Sinéad Carew

NEW YORK, March 1 (Reuters) - The S&P 500 and the Dow Jones Industrial Average rose on Friday after three days of losses, lifted by optimism about the prospects for a U.S.-China trade agreement, but gains were capped by downbeat manufacturing and consumer reports.

A private survey showed China’s factory activity contracted for a third straight month in February, though at a slower pace, indicating a marginal improvement in domestic demand as a flurry of policy stimulus kicked in from late last year.

The figures were more upbeat than the official Chinese PMI survey on Thursday that showed new orders expanding and come after stronger-than-expected growth in U.S. gross domestic product in the fourth quarter.

“The optimism over trade resolution is outweighing the weakening economic data,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, who said Friday’s Chinese and U.S. data were not bullish signs.

After President Donald Trump delayed a deadline that would have triggered higher tariffs on Chinese imports, Bloomberg reported on Thursday that a summit between Trump and his Chinese counterpart Xi Jinping to sign a final trade deal could happen as soon as mid-March.

The report was behind the latest trade optimism in the market as it boosted hopes for improving global growth prospects, Detrick said.

But in the meantime, ISM data also showed U.S. manufacturing activity for February dropped to its lowest since November 2016 and the University of Michigan survey showed consumer sentiment fell short of expectations in the month.

At 2:51 PM ET, the Dow Jones Industrial Average rose 110.27 points, or 0.43 percent, to 26,026.27, the S&P 500 gained 17 points, or 0.61 percent, to 2,801.49 and the Nasdaq Composite added 60.42 points, or 0.8 percent, to 7,592.95.

The benchmark S&P 500 index has risen 11.8 percent this year, bolstered by trade hopes and the Federal Reserve’s cautious stance on interest rates.

Of the 11 major S&P 500 sectors, eight were higher. The healthcare sector rose 1.4 percent, providing the biggest boost and supported by gains in health insurers Cigna Corp and UnitedHealth Group, which bounced back after falling for much of the week.

The consumer discretionary sector rose 1 percent, lifted by a 5.9 percent jump in Foot Locker shares.

The footwear retailer beat quarterly same-store sales estimates and helped drive a 1.9 percent gain in shares of supplier Nike Inc.

Gap Inc surged 18.3 percent, making it the biggest percentage gainer in the S&P, after it said it would separate its better-performing Old Navy brand and close about 230 Gap stores.

Drug retailer Walgreens Boots Alliance Inc fell 7.1 percent, making it one of the biggest losers in the S&P, a day after brokerage Baird cut its price target for the stock.

A Commerce Department report showed inflation pressures remaining tame, which along with slowing domestic and global economic growth, gave more credence to the Federal Reserve’s “patient” stance toward raising interest rates further this year. Advancing issues outnumbered declining ones on the NYSE by a 1.62-to-1 ratio; on Nasdaq, a 1.87-to-1 ratio favored advancers.

The S&P 500 posted 52 new 52-week highs and no new lows; the Nasdaq Composite recorded 81 new highs and 27 new lows. (Additional reporting by Shreyashi Sanyal and Medha Singh in Bengaluru; Editing by Anil D’Silva, Sriraj Kalluvila and Dan Grebler)

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