NEW YORK, June 27 (Reuters) – Wall Street continued its upward momentum on Friday, with the S&P 500 and the Nasdaq closing at record highs. Optimism surrounding potential trade agreements encouraged investors, while fresh economic data strengthened expectations that the Federal Reserve may soon lower interest rates.

However, stock gains were trimmed after President Donald Trump ended trade talks with Canada in response to its digital tax targeting technology companies.

Despite that, all three of the top U.S. stock indices recorded weekly increases. With its record close, the tech-focused Nasdaq officially entered a bull market, marking a sustained upswing from its low point on April 8.

The Dow Jones Industrial Average (Dow) still remained about 2.7% below its all-time high, which it reached on December 4.

"The market has shown remarkable strength," said Chuck Carlson, CEO of Horizon Investment Services based in Hammond, Indiana. "Investors are pushing forward, looking for key breakout points."

"No one wants to end up on the wrong side of this rally," Carlson noted. "A number of investors missed the earlier moves, and now that the S&P is approaching record territory, more are eager to get in."

Government data from the Commerce Department revealed that consumer spending and income both unexpectedly declined in May. Meanwhile, although tariffs haven't immediately driven up prices, inflation remains slightly above the Federal Reserve’s target of 2% annually.

Another report, published by the University of Michigan, showed consumer sentiment improving in June compared to previous months, though it is still below the levels seen in December after the last election cycle.

Market indicators suggest there’s a 76% chance the Fed will cut interest rates in September, and a 19% chance that it could happen as early as July, according to CME’s FedWatch tool.

An agreement between China and the U.S. has been reached to speed up rare-earth shipments to the United States, ahead of the July 9 deadline for the expiration of a previous 90-day tariff suspension.

Additionally, the U.S. Treasury Secretary stated that trade negotiations with 18 significant trading partners could potentially be concluded before the Labor Day holiday on September 1.

The Dow Jones Industrial Average increased by 432.43 points, or 1.00%, finishing at 43,819.27. The S&P 500 rose 32.05 points, or 0.52%, to close at 6,173.07, and the Nasdaq Composite climbed 105.55 points, or 0.52%, ending at 20,273.46.

Out of the 11 major industry groups in the S&P 500, consumer discretionary stocks achieved the highest percentage rise, while the energy sector lagged behind all others.

Chipmaker Micron boosted investor enthusiasm for artificial intelligence-related stocks with an optimistic forecast. Nvidia, edging closer to a $4 trillion valuation, saw its shares rise 1.8%, following its recent status as the world’s most valuable company.

Shoe giant Nike saw its stock jump 15.2%, after predicting a smaller-than-expected decline in first-quarter sales.

On the New York Stock Exchange, advancing stocks outpaced declining ones by a ratio of roughly 1.29 to 1.

There were 347 stocks reaching new highs, while 55 hit new lows on the NYSE.

Across the Nasdaq, 2,111 stocks gained while 2,342 declined, resulting in a slightly negative advance/decline ratio of 1.11 to 1.

On the S&P 500, there were 35 new 52-week highs and 6 new lows. The Nasdaq Composite recorded 101 new highs and 68 new lows.

Trading volume on U.S. exchanges reached 22.07 billion shares, higher than the 20-day average of 18.27 billion shares per session.