(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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U.S. Steel drops after Biden halts Nippon Steel's ( NISTF ) takeover

plan

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Liquor stocks fall after US surgeon general's warning

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Manufacturing PMI rises to nine-month high in Dec

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Indexes up: Dow 0.62%, S&P 500 1.08%, Nasdaq 1.46%

(Updates to mid-session trading)

By Johann M Cherian and Pranav Kashyap

Jan 3 (Reuters) - Wall Street's main indexes moved

higher on Friday as technology stocks rebounded from a losing

streak, while investors geared up for potential policy shifts

under the incoming Trump administration.

At 11:53 a.m. ET, the Dow Jones Industrial Average

rose 264.88 points, or 0.62%, to 42,657.15, the S&P 500

gained 63.35 points, or 1.08%, to 5,931.90 and the Nasdaq

Composite gained 282.23 points, or 1.46%, to 19,563.03.

All of the 11 S&P 500 sectors were trading in positive

territory, led by a 1.7% rise in consumer discretionary stocks

. Technology stocks advanced 1.5% after

falling for the past four sessions and Nvidia ( NVDA ), up 4%,

drove gains on all three major indexes.

Wall Street had a dour start to the new year, with the S&P

500 and Nasdaq erasing early gains to close lower for a fifth

straight session on Thursday, bucking a historical trend where

markets rally in the last five sessions of December and the

first two sessions of January.

Despite Friday's gains, all three major indexes were on

track to log weekly declines of nearly 1% each.

Analysts have highlighted uncertainty surrounding the

policies that President-elect Donald Trump's administration

might roll out, especially with his Republican party holding

sway over Congress. The newly elected Congress will begin its

first session on Friday, with Trump set to take the oath of

office on Jan. 20.

Trump's proposals, ranging from slashing corporate taxes and

easing regulations to imposing tariffs and curbing illegal

immigration, could boost corporate profits and energize the

economy. However, they also pose inflation risks.

"Once you get the (Trump) administration settled and things

calm down by the end of January, you're going to start to see

people become more and more bullish if the new administration

starts rolling out a lot of pro-business mandates," said Michael

Matousek, head trader at U.S. Global Investors Inc.

Hindering the case for easing rates, however, data

continues to suggest resilience in the economy, with a fresh

survey showing manufacturing activity moved closer to recovery

in December.

Traders have toned down their expectations on interest

rate cuts by the Federal Reserve and now see the first dovish

move coming in May, per the CME Group's FedWatch Tool.

The yield on the 10-year Treasury note also

remains anchored above the psychological level of 4.5%.

Given the uncertainty, inflows into U.S. equity funds

experienced a sharp decline in the week leading up to Jan. 1.

Richmond Fed President Thomas Barkin was the first among

policymakers this year to comment on the outlook for the economy

and backed more growth upside over downside.

Alcoholic beverage makers such as Constellation Brands ( STZ )

dropped 1%, Molson Coors ( TAP/A ) lost 2.8%, and

Brown-Forman ( BF/A ) slipped 1.5%, after the U.S. surgeon

general urged cancer warnings on the labels of alcoholic

drinks.

U.S. Steel slid 6.4% after President Joe Biden blocked

Nippon Steel's ( NISTF ) proposed $14.9 billion purchase of the

company.

Advancing issues outnumbered decliners by a 2.58-to-1 ratio

on the NYSE and by a 2.15-to-1 ratio on the Nasdaq.

The S&P 500 posted 2 new 52-week highs and 11 new lows while

the Nasdaq Composite recorded 49 new highs and 25 new lows.