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* Kudlow says U.S. and China getting close to trade deal
* Applied Materials jumps on strong forecast
* J.C. Penney gains on smaller-than-expected loss
* Data shows domestic retail sales rebound in October
* Futures up: Dow 0.37%, S&P 0.32%, Nasdaq 0.54% (Adds comments, updates market action)
By Arjun Panchadar
Nov 15 (Reuters) - The S&P 500 and Dow Jones indexes were set to hit fresh record highs at the open, as upbeat comments related to U.S.-China trade talks and strong earnings from semiconductor industry bellwether Applied Materials helped lift the mood.
White House economic adviser Larry Kudlow said late on Thursday that the world’s two largest economies were getting close to a trade agreement, citing what he called very constructive talks with Beijing about ending a 16-month trade war.
On Friday, U.S. Commerce Secretary Wilbur Ross said there would be a call between U.S. and Chinese officials later in the day as both sides continue to hammer out a phase one trade pact, but added U.S. tariffs on Chinese imports could still start Dec. 15.
“We have been here so many times where the market gets its hopes up and then it gets crushed,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“But certainly with an election coming up next year, you would want to have all these things behind you, so a mini-deal or a trade truce makes a lot of sense.”
Shares in chip gear maker Applied Materials Inc jumped 6.6% in premarket trading after it forecast first-quarter results above estimates, as it expects more clients to upgrade their equipment ahead of the 5G rollout in key markets.
Chipmakers have been among the victims of a long-running trade war between Washington and Beijing, as they rely on China for a huge portion of their revenue. However, signs of progress on trade have helped drive the Philadelphia Semiconductor index to record levels.
Other chip stocks Advanced Micro Devices Inc, Micron Technology Inc and Lam Research Corp gained between 1.2% and 1.8%.
The benchmark S&P hit an all-time closing high on Thursday, as robust earnings from retail giant Walmart Inc pointed to a strong U.S. consumer at a time when spending is seen as a key support for the economy.
Shares in J.C. Penney Co Inc soared 10% on Friday after the embattled retailer reported a smaller-than-expected quarterly loss, benefiting from lower advertising expenses and an increase in margins.
Data showed U.S. retail sales rebounded in October, but consumers cut back on purchases of big-ticket household items and clothing, which could temper expectations for a strong holiday shopping season.
Another set of data expected at 9:15 a.m. ET is likely to show industrial production declined in October.
Wall Street’s main indexes have been powered recently by hopes of a trade deal, a largely better-than-expected third-quarter earnings season and a third interest rate cut by the Federal Reserve.
At 8:49 a.m. ET, Dow e-minis were up 103 points, or 0.37%. S&P 500 e-minis were up 10 points, or 0.32% and Nasdaq 100 e-minis were up 44.25 points, or 0.54%.
Nvidia Corp shares were marginally higher as the company predicted strong demand for chips used in data centers, but said it expects its gaming chip business to be impacted by seasonal weakness in the fourth quarter.
RH rose 6.7% as Warren Buffett’s Berkshire Hathaway Inc disclosed a new investment in the luxury furniture and home furnishings chain once known as Restoration Hardware. (Reporting by Arjun Panchadar and Agamoni Ghosh in Bengaluru; Editing by Shounak Dasgupta and Anil D’Silva)