By Michael Wursthorn and Georgi Kantchev 

--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 edged higher Friday, as trade-sensitive stocks led the blue-chip index toward notching its biggest week of gains since mid-July.

Investors continued to tamp down their fears of an all-out trade war between the world's two biggest economies and bought stocks that had been whipsawed by the threats and tariffs the U.S. and China have leveled at one another.

Shares of aerospace manufacturer Boeing and 3M, a maker of industrial adhesives and Post-it Notes, led the index of 30 stocks higher. 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.

But investors warned the Dow industrials remain vulnerable to the continuing trade battle, especially since the index's components get a bigger portion of their revenue from overseas and China compared with the S&P 500. The $200 billion slate of tariffs on Chinese imports President Trump recently announced are set kick in Monday, first at 10% and then rising to 25% at the end of the year.

"While [trade talks] aren't as adversarial" as they were several months earlier, said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management, "we're not at a resolution either."

Meanwhile, investors are focusing on the strong fundamental outlook that has underpinned the stock market this year, including solid corporate earnings and a robust U.S. economy, which is growing at its fastest rate since 2014.

"We're clearly anxious to get back to earnings season in a few weeks," Mr. Wiegand added.

The Dow Jones Industrial Average rose 68 points, or 0.3%, to 26724, while the S&P 500 was little changed. The Nasdaq Composite slipped 0.4% as technology stocks weakened later in the session.

While the Dow and the S&P remain on pace to notch weekly gains, the Nasdaq was on course to end the week down 0.2%.

Boeing led the Dow higher, gaining 1.2%, while 3M and Caterpillar were also up more than 0.5%. McDonald's shares rose 2% after the fast-food chain raised its dividend late Thursday.

In addition to monitoring the implementation of the latest tariffs, investors are 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 Eric Stein, co-director of global income at Boston-based Eaton Vance, 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.

Elsewhere, the Stoxx Europe 600 rose 0.4% to push its weekly gain to 1.7%. Most stocks in Asia rallied, with Chinese stocks registering their largest one-week percentage gain since 2016.

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

(END) Dow Jones Newswires

September 21, 2018 15:47 ET (19:47 GMT)

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