US STOCKS-Equities climb on Fed rate cut optimism, Boeing surges

(Updates to afternoon US trading)

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Boeing (BA) rises, expects higher deliveries of jets in 2026

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Bitcoin stabilizes following massive losses

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Warner Bros advances on reports of offer from Netflix (NFLX)

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Indexes up: Dow 0.35%, S&P 500 0.25%, Nasdaq 0.66%

By Chuck Mikolajczak

NEW YORK, Dec 2 (Reuters) - U.S. stocks advanced but were off their earlier highs in muted trading on Tuesday, buoyed by gains in technology shares as expectations the Federal Reserve will cut interest rates next week remain elevated. The major U.S. indexes were on track for their sixth gain in the past seven sessions. Equities declined on Monday amid soft data on the manufacturing sector, a jump in U.S. Treasury yields as Japanese bond yields surged, and a drop in bitcoin and crypto-related stocks.

But with a dearth of economic data for the session, the rise in bond yields eased and bitcoin rebounded, which enabled stocks to recover somewhat as the focus shifted to the Fed.

"It's possible that both of those things are adding a little bit of volatility to the market at a time when there's kind of a catalyst vacuum until the Fed," said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

"On the flip side, it seems like largely you can take away positive consumer read-throughs on some of these Black Friday, Cyber Monday, data points. I'm more content or happier to see the strength in the consumer versus some of these things happening under the surface with yields and bitcoin. Those are things that will pass."

BOEING SURGES ON FORECAST

The Dow Jones Industrial Average rose 166.36 points, or 0.35%, to 47,455.69, the S&P 500 gained 16.90 points, or 0.25%, to 6,829.53 and the Nasdaq Composite gained 153.75 points, or 0.66%, to 23,429.67. Boeing (BA) shot up more than 9% as the biggest boost to the Dow after the planemaker forecast higher deliveries for its 737 and 787 jets next year.

Among S&P 500 sectors, tech led gains on the S&P 500, fueled by gains in megacaps Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT) of about 1% each, while Intel (INTC) jumped nearly 8%.

Recent data has pointed to a gradually cooling economy, and policymakers had urged caution on rate cuts, warning that inflation pressures could resurface. But comments from several Fed officials in recent days sent market expectations higher for a rate cut at the central bank's December meeting. Expectations for a rate cut of 25 basis points at the Fed meeting are at 89.2%, according to CME's FedWatch Tool, up from 63% a month ago.

Friday's release of the Personal Consumption Expenditures Index, the Fed's preferred inflation gauge, could sharpen expectations for the central bank's policy call next week. Markets were also eyeing who may succeed Fed Chair Jerome Powell when his term ends next year, with reports suggesting White House economic adviser Kevin Hassett is a top contender. Trump said on Tuesday he would announce his selection early next year. On the downside, Procter & Gamble (PG) lost 1.9% after the consumer packaged goods company flagged a hit from the U.S. government shutdown. Warner Bros Discovery (WBD) climbed 2.8% after reports said it received a second round of bids, including an offer from Netflix (NFLX) .

Crypto stocks, including Strategy and Coinbase , surged 8.2% and 3.7%, respectively, as bitcoin prices rebounded after its largest dollar loss since May 2021 in the previous session.

Advancing issues outnumbered decliners by a 1.02-to-1 ratio on the NYSE, while on the Nasdaq, advancing issues outnumbered decliners by a 1.1-to-1 ratio.

The S&P 500 posted 10 new 52-week highs and three new lows while the Nasdaq Composite recorded 63 new highs and 90 new lows on Tuesday. (Reporting by Chuck Mikolajczak; additional reporting by Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Tasim Zahid, Shinjini Ganguli, Rod Nickel)