*

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

*

Manufacturing PMI rises to nine-month high in Dec

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Indexes up: Dow 0.43%, S&P 500 0.81%, Nasdaq 1.24%

(Updates after market open)

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 10:05 a.m. ET, the Dow Jones Industrial Average

rose 181.31 points, or 0.43%, to 42,569.94, the S&P 500

gained 47.44 points, or 0.81%, to 5,915.99 and the Nasdaq

Composite gained 236.31 points, or 1.24%, to 19,519.58.

All 11 S&P 500 sectors were trading in positive territory,

with the information technology sector bouncing back

1.3% after falling for the past four sessions. Nvidia ( NVDA )

was driving 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.

All three major indexes were on track to log weekly declines

of about 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 certain risks

"The main issue people will start focusing on is, if his

(Trump's) decisions will be inflationary and if they are, does

that signal that the Fed will do an abrupt course change and

start raising rates." said Peter Andersen, founder of Andersen

Capital Management.

Traders now expect the Federal Reserve to lower rates by

about 50 basis points this year, per the CME Group's FedWatch

Tool.

Hindering the case for easing rates, however, data continues

to suggest resilience in the economy. On Friday, data showed

manufacturing moved closer to recovery in December, with

production rebounding and new orders rising further.

The yield on the 10-year Treasury note remains

anchored near the psychological level of 4.5%.

Inflows into U.S. equity funds experienced a sharp decline

in the week leading up to Jan. 1.

Comments from Richmond Fed President Thomas Barkin are also

on tap.

Stretched equity valuations have been a concern for

investors but most brokerages expect another year of gains for

U.S. stocks, propelled by strong corporate performance.

Alcoholic beverage makers such as Constellation Brands ( STZ )

dropped 1.1%, Molson Coors ( TAP/A ) lost 2.3%, 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 7.2% after President Joe Biden blocked

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

company.

Block rose 4.7% after brokerage Raymond James raised

its rating to "outperform" from "market perform".

Trading volumes are expected to be subdued following the New

Year's holiday on Wednesday.

Advancing issues outnumbered decliners by a 1.68-to-1 ratio

on the NYSE and by a 1.5-to-1 ratio on the Nasdaq.

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

while the Nasdaq Composite recorded 36 new highs and 18 new

lows.