Friday's early afternoon trade: Rallies on trade deal hopes; Apple hits record high

Wall Street rose for the third straight session on Friday, with hopes running high that the talks between President Donald Trump and Chinese Vice Premier Liu He would culminate in a partial trade deal and delay planned US tariff increases.

Shares of Apple Inc hit a record high and were the biggest boost to the S&P 500 and Nasdaq, while the technology sector was set for its best day in five weeks.

All eyes are now on Trump meeting Liu in the White House at 2:45 p.m. EDT (1845 GMT). The top-level discussions concluded their second day on Friday.

"The President seems to indicate that there is a possibility of an interim trade deal," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"The thought is that there will be some conciliatory moves from both sides, as news earlier in the week had investors worried that these talks might be moving in the wrong direction."

The S&P 500 and Dow Jones indexes looked set to break a three-week losing streak on optimism that the world's top two economies could cool off their row before more US tariffs kick in next week.

Investors also moved into cyclical sectors such as financials, ahead of the third-quarter earnings season set to begin with banks reporting next week.

The S&P 500 bank index jumped 2.5%, on track for its best day in a month, on expectations that strength in mortgage banking and cheap valuations could provide support to some of the biggest US lenders.

Apple rose 2% as Wedbush raised its price target, citing confidence in the company's new video streaming service.

At 12:30 p.m. ET the Dow Jones Industrial Average was up 389.01 points, or 1.47%, at 26,885.68, the S&P 500 was up 43.03 points, or 1.46%, at 2,981.16 and the Nasdaq Composite was up 133.54 points, or 1.68%, at 8,084.33.

The industrial sector gained 2.2%, boosted by a 17.2% surge in shares of Fastenal Co after the industrial distributor beat quarterly profit expectations.

Defensive utilities was the only sector trading in the red, while consumer staples and real estate stocks posted the smallest gains, suggesting an uptick in risk appetite.