*

Indexes up: Dow 0.94%, S&P 500 0.80%, Nasdaq 0.97%

*

Bank stocks rise as Fed proposes relaxed leverage rules

*

Economic data shows mixed signals with durable goods

orders up,

GDP down

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Record copper prices send Freeport-McMoRan, Southern

Copper

higher

(Updates with closing prices)

By Stephen Culp

NEW YORK, June 26 (Reuters) - Wall Street closed higher

on Thursday, nudging the S&P 500 and the Nasdaq nearer to record

closing highs as the Israel-Iran ceasefire 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.

All three major U.S. stock indexes advanced in a broad rally

which placed them on track for weekly gains.

The S&P 500 and the Nasdaq are now within a hair's breadth

of all-time closing highs, and as the seconds ticked down to the

closing bell, it looked as if those records could be reached.

"Clearly, the pull forward of rate cuts into 2025 is one of

the more significant factors" of the market's price action,

says Bill Northey, senior investment director at U.S. Bank

Wealth Management, Billings, Montana. "Expectations now point to

three rate cuts this year."

Bank stocks outperformed after the Fed unveiled a proposal

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

big banks are required to hold against relatively low-risk

assets.

The S&P 500 banks index advanced 1.6%.

"This administration came in promising deregulation," said

Ross Mayfield, investment strategy analyst at Baird in

Louisville, Kentucky. "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 nearly a 21%

likelihood of a 25 basis point reduction the Fed Funds target

rate at the July Fed meeting, and more than a 75% probability

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

according to CME's FedWatch tool.

"As we look at economic data, including the labor market,

economic activity and price levels, we see that some additional

easing is appropriate through the end of this year," Northey

added. "The question remains around both magnitude and

importantly timing of the first cut."

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 due to weaker than expected

consumer spending, while ongoing jobless claims reaching

multi-year highs, suggesting potential cracks appearing in the

labor market.

On the other hand, new orders for durable goods and pending

home sales provided robust surprises to the upside.

The Dow Jones Industrial Average rose 404.41

points, or 0.94%, to 43,386.84, the S&P 500 gained 48.86

points, or 0.80%, to 6,141.02 and the Nasdaq Composite

gained 194.36 points, or 0.97%, to 20,167.91.

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

services enjoyed the largest percentage gains, while

real estate was the biggest laggard.

Micron forecast better-than-expected fourth quarter

revenue late Wednesday. Even so, the tech firm's shares dropped

1.0%.

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

Freeport-McMoRan FCX.N and Southern Copper SCCO.N by 6.8% and

7.8%, respectively.

Advancing issues outnumbered decliners by a 4.76-to-1 ratio

on the NYSE. There were 338 new highs and 66 new lows on the

NYSE.

On the Nasdaq, 3,128 stocks rose and 1,359 fell as advancing

issues outnumbered decliners by a 2.3-to-1 ratio.

The S&P 500 posted 29 new 52-week highs and 6 new lows while

the Nasdaq Composite recorded 79 new highs and 67 new lows.

Volume on U.S. exchanges was 16.22 billion shares, compared

with the 18.10 billion average for the full session over the

last 20 trading days.