Wall Street takes a breather after Friday's rally

(Reuters) – U.S. stocks rose on Monday as gains in the technology and consumer discretionary sectors helped extend Friday’s rally, with investors focused on the ongoing U.S.-China trade talks.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 7, 2019. REUTERS/Brendan McDermid

The rally was led by momentum names such as Amazon.com Inc (AMZN.O), Netflix Inc (NFLX.O) and big technology stocks, adding to Friday’s surge of over 3 percent after strong jobs numbers and Federal Reserve Chair Jerome Powell’s comments soothed worries about interest rate hikes.

Fears of a global slowdown have caused sharp pullbacks in the markets over the last few months. But since hitting a 20-month low on Christmas Eve just a rounding error from levels considered to be a bear market, the S&P 500 .SPX has now gained over 8.5 percent.

The trade spat has been a major overhang and the effects of tariffs on billions of dollars of goods have started showing up in economic data and a reduction in analysts’ estimates for earnings growth rates at S&P 500 companies.

U.S. Commerce Secretary Wilbur Ross said on Monday China and the United States were likely to reach a good settlement over immediate trade issues, while an agreement on structural trade issues and enforcement will be harder.

“We’re looking at commentary from the Fed suggesting they’re going to be flexible around rate hikes, there’s positive commentary on the U.S. trade war,” said Christopher Anselmo, director at Nasdaq IR Intelligence. “That positive sentiment is forward looking.”

The consumer discretionary index .SPLRCD jumped 2.49 percent, while the technology sector .SPLRCT gained 1.14 percent.

In economic data, the Institute for Supply Management’s domestic services sector index fell to a five-month low, although one bright spot was a rise in new orders, which Anselmo

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