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Indexes up: Dow 0.86%, S&P 500 0.77%, Nasdaq 0.94%

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Bank stocks rise as Fed proposes relaxed leverage rules

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Economic data shows mixed signals with durable goods

orders up,

GDP down

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Nike rises ahead of quarterly results

(Updates to afternoon)

By Stephen Culp

NEW YORK, June 26 (Reuters) - Wall Street resumed its

advance on Thursday, pushing the S&P 500 and the Nasdaq closer

to record closing highs as the Israel-Iran cease-fire continued

to hold and a raft of economic indicators appeared to support

the case for the U.S. Federal Reserve lowering borrowing costs

this year.

A broad rally pushed all three major U.S. stock indexes

higher, placing them on track for weekly gains.

The S&P 500 and the Nasdaq are now within striking distance

of all-time closing highs, while the Nasdaq 100, a subset of the

Nasdaq Composite, notched its second consecutive record closing

high on Wednesday.

"Aside from some broad momentum and some key technical

levels, the market is buoyed by some of the economic data this

morning," said Ross Mayfield, investment strategy analyst at

Baird in Louisville, Kentucky.

Bank stocks outperformed after the Fed unveiled a proposal

to relax its leverage rules, which would ease the capital big

banks are required to hold against relatively low-risk assets.

The S&P 500 banks index advanced 1.7%.

"This administration came in promising deregulation,"

Mayfield added. "And this is not just an example of that, but

kind of a signpost that there could be more to come."

Richmond Fed President Thomas Barkin cautioned against

taking options off the table amid ongoing economic uncertainty,

but added that he did not expect tariffs to be "as inflationary

as a lot of people worry about."

A muted tariff effect could help make the case for a rate

cut this fall, according to San Francisco Fed President Mary

Daly. Boston Fed President Susan Collins said on Wednesday she's

leaning toward a rate cut later this year amid an uncertain

economic outlook.

These remarks follow Fed Chair Jerome Powell's two-day

congressional testimony, at which he reiterated the central

bank's wait-and-see policy stance with respect to rate cuts and

economic tariff effects.

Financial markets are currently pricing in a more than 22%

likelihood of a 25 basis point reduction the Fed Funds target

rate at the July Fed meeting, and almost a 73% probability that

this year's first rate cut will come in September, according to

CME's FedWatch tool.

"Between now and the July meeting, we have the July 9th end

of the 90-day reciprocal tariff pause," Mayfield said. "So to

the extent that the Fed is primarily worried about tariff

inflation, they will get a lot more information on July 9th."

Last week the Fed released its updated Summary of Economic

Projections, which showed policymakers anticipate cutting the

key policy rate by about half a percentage point by year-end.

A spate of economic data showed first quarter GDP contracted

more than previously reported on weaker than expected consumer

spending, while ongoing jobless claims reaching multi-year

highs, suggesting potential cracks appearing in the labor

market.

On the upside, new orders for durable goods and pending home

sales provided robust surprises to the upside.

The Dow Jones Industrial Average rose 370.26 points,

or 0.86%, to 43,352.69, the S&P 500 gained 46.90 points,

or 0.77%, to 6,139.05 and the Nasdaq Composite

gained 187.32 points, or 0.94%, to 20,160.87.

Among the 11 major sectors of the S&P 500, Micron

forecast better-than-expected fourth quarter revenue late

Wednesday. Even so, the tech firm's shares were off 2.0%

Nvidia ( NVDA ) rose 1.3% after scaling a fresh all-time

high on Wednesday.

Nike NKE.N advanced 2.2% ahead of the athletic wear

company's quarterly results.

Copper prices jumped to a three-month high, boosting miners

Freeport-McMoRan FCX.N and Southern Copper SCCO.N by 7.3% and

7.8%, respectively.

Advancing issues outnumbered decliners by a 3.74-to-1 ratio

on the NYSE. There were 251 new highs and 55 new lows on the

NYSE.

On the Nasdaq, 2,819 stocks rose and 1,593 fell as advancing

issues outnumbered decliners by a 1.77-to-1 ratio.

The S&P 500 posted 26 new 52-week highs and 6 new lows while

the Nasdaq Composite recorded 65 new highs and 59 new lows.