By Georgi Kantchev and Michael Wursthorn 

--Dow, S&P 500 higher, on track for weekly gains

--Shares in Europe, Asia rise

--Investors look to Fed meeting next week

The Dow Jones Industrial Average rose Friday, putting the index on course to notch its biggest week of gains since mid-July.

Trade-sensitive stocks helped the Dow rebound back into record-setting territory this week, as investors took cues from officials in Washington, D.C., as signs that geopolitical tensions between the world's two largest economies could be easing. Market participants are now focusing on the strong fundamental outlook, including solid corporate earnings and a robust U.S. economy, which is growing at its fastest rate since 2014.

The Dow has risen in eight of the past nine trading sessions, with the most recent gains putting the blue-chip index up 2.2% for the week, its best weekly stretch since July 13.

"Trade continues to be a point of concern," said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management. "But we're anxious to get back to earnings season in a few weeks to get greater detail on how companies are actually performing."

The Dow Jones Industrial Average rose 104 points, or 0.4%, to 26760, while the S&P 500 added 0.2%. The Nasdaq Composite slipped 0.1% as technology stocks weakened in late-morning trading.

All three indexes are on track to notch weekly gains, while the S&P 500 and Dow industrials were on track to close at records Friday.

Within the Dow, Boeing rose 1% to lead the index higher, while 3M and Caterpillar were also up more than 0.5%. McDonald's shares rose nearly 2% after the fast-food chain raised its dividend late Thursday.

Elsewhere, the Stoxx Europe 600 was recently up 0.4% following a rally in most Asian markets. Chinese stocks registered their largest one-week percentage gain since 2016.

The gains come as investors this week mostly shrugged off the imposition of new tariffs in the continuing trade spat between the U.S. and China. Market participants instead focused on the strong fundamental outlook, including solid corporate earnings and a robust U.S. economy, which is growing at its fastest rate since 2014.

"The broader picture is clear: The U.S. economy is doing very well," said Eric Stein, co-director of global income at Boston-based Eaton Vance. "At some point you start to wonder if this is as good as it gets. But we are not there yet."

Investors were also looking to next week's Federal Reserve meeting. Most watchers are expecting the U.S. central bank to raise interest rates.

"With the economy doing well and inflation not picking up much, it has been easy for the Fed this year," said Mr. Stein, who is expecting a rate rise next week and one more in December. "A year from now is where it gets more interesting."

The 10-year U.S. Treasury yield edged slightly higher to 3.078%, compared with 3.076% on Thursday. Yields move inversely to prices.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.2%.

The British pound, meanwhile, fell throughout the morning after European Union leaders rejected on Thursday the British government's proposal for how to maintain economic relations with the bloc post-Brexit, ticking down further after Prime Minister Theresa May struck a combative tone when delivering a statement about the rejection.

The pound was down 1.15% against the euro and 1.45% against the dollar.

In Asia, Chinese equities led the way, with the Shanghai Composite closing up 2.5% to extend its weekly gain to 4.3%, its best-five day stretch since 2016. Japan's Nikkei Stock Average rose 0.8% while Hong Kong's Hang Seng finished up 1.7%.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

September 21, 2018 12:31 ET (16:31 GMT)

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