(Updates to mid-afternoon)

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Indexes up: Dow 0.65%, S&P 500 1.65%, Nasdaq up 2.70%

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Deutsche Bank sees S&P 500 rising to 8,000 by 2026 end

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Bristol Myers gains after rival's positive late-stage data

By Stephen Culp

NEW YORK, Nov 24 (Reuters) - Wall Street stocks advanced

on Monday, extending Friday's rally as increased odds that the

U.S. Federal Reserve will lower its key Fed funds target rate in

December helped investors look past concerns over inflated tech

valuations.

U.S. indexes embarked on a holiday-shortened week with solid

gains, with gains in the "Magnificent Seven" group of artificial

intelligence-related momentum stocks sending the tech-heavy

Nasdaq up 2.7%.

A flurry of economic reports, belatedly released after the

recent six-week government shutdown, hinted at labor market

weakness and stubbornly elevated inflation, which has bolstered

investor optimism that the Fed will implement its third and

final interest rate cut of 2025 at the conclusion of its

December monetary meeting.

INVESTORS 'BREATHE SIGH OF RELIEF'

Dovish commentary from Fed Governor Christopher Waller and New

York Fed President John Williams lent some support to that

optimism, although other policymakers voiced dissenting

opinions.

"When New York Fed President John Williams told us that a

December rate cut was still on the table, I think that gave

investors the reason to breathe a sigh of relief," said Sam

Stovall, chief investment strategist of CFRA Research in New

York.

Financial markets are pricing in a 79.1% likelihood of that

occurring, up from 42.4% a week ago, according to CME's FedWatch

tool.

The unusually timed release of economic data is set to

continue this week, with retail sales, producer prices, and new

orders for durable goods joining independent indicators such as

Case-Shiller home prices, the Conference Board's consumer

confidence report and the National Association of Realtors'

pending home sales data.

Third-quarter reporting season is drawing to a close. As of

Friday, nearly 95% of the companies in the S&P 500 have

reported, 83% of which delivered better than expected earnings.

Analysts now expect third-quarter aggregate earnings growth of

14.7% for constituents of the bellwether index, a significant

improvement over the 8.8% estimate on October 1, according to

LSEG data.

The Dow Jones Industrial Average rose 299.92 points,

or 0.65%, to 46,545.33, the S&P 500 gained 108.81 points,

or 1.65%, to 6,711.80 and the Nasdaq Composite

gained 601.87 points, or 2.70%, to 22,874.95.

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

services enjoyed the largest percentage gain. Consumer

staples and energy stocks were lower.

The U.S. holiday shopping season kicks off this week,

starting with Thursday's Thanksgiving holiday.

The health of the consumer, who shoulders about 70% of the

U.S. economy, will be assessed for any signs of weakness amid

increased layoff announcements and weak survey reports. Even

so, the National Retail Federation expects holiday sales to top

$1 trillion for the first time.

Earnings from consumer-oriented companies such as Best Buy ( BBY )

are expected later this week.

TECH VALUATION WORRIES LINGER

AI-bellwether Nvidia's ( NVDA ) strong forecast last week failed

to assuage looming fears of a potential AI bubble.

The S&P 500 and Nasdaq remain on track for monthly losses.

Deutsche Bank helped revive investor risk appetite after

projecting the S&P 500 would reach 8,000 by the end of next

year, the most bullish forecast among major global brokerages.

Bristol-Myers gained 4.2% after European rival Bayer

unveiled positive late-stage data for its

cardiovascular drug, boosting confidence in Bristol-Myers'

experimental drug milvexian.

Centene ( CNC ) and Oscar Health ( OSCR ) gained 5.3% and

18.9%, respectively, following a report that Trump is

considering extending the Affordable Care Act's subsidies for

two years.

Advancing issues outnumbered decliners by a 2.51-to-1 ratio

on the NYSE. There were 87 new highs and 59 new lows on the

NYSE.

On the Nasdaq, 3,265 stocks rose and 1,337 fell as advancing

issues outnumbered decliners by a 2.44-to-1 ratio.

The S&P 500 posted 19 new 52-week highs and two new lows

while the Nasdaq Composite recorded 100 new highs and 102 new

lows.