GLOBAL MARKETS-S&P 500, Nasdaq hit record highs; dollar gains ground

* Nasdaq, S&P 500 hit record closing highs
* Q2 U.S. GDP data better than expected
* Earnings from Alphabet, Intel, Starbucks top expectations
* Dollar hits two-month high
* Investors eye U.S.-China trade talks, Fed meeting

(Updates to market close)
By Stephen Culp
NEW YORK, July 26 (Reuters) - The S&P 500 and the Nasdaq
closed at record levels and the dollar reached a two-month high
on Friday as strong economic data and a string of upbeat
earnings reports brought buyers back to the market.
Positive quarterly results from a broad range of U.S.
companies, including Google parent Alphabet Inc GOOGL.O , Intel
Corp INTC.O , Starbucks Corp SBUX.O and McDonald's Corp
MCD.N helped allay disappointment over Amazon.com's AMZN.O
miss. U.S. economic growth slowed to a 2.1% annual rate in the
second quarter, a better reading than analysts expected, driven
by a jump in consumer spending, which made up for a drop in
imports and a smaller inventory build-up. "GDP growth was not fabulously good and not fabulously bad.
It builds a case for the Fed to cut rates by 25 basis points and
then sit on the sidelines for the remainder of this year," said
Paul Nolte, portfolio manager at Kingsview Asset Management in
Chicago.
Market participants now look to the coming week, when
negotiators from the U.S. and China are due to resume talks in
Beijing aimed at ending the market-rattling trade war, and the
Federal Reserve is expected to cut interest rates for the first
time in a decade at the conclusion of their two-day monetary
policy meeting.
"Anybody who's still thinking that the Fed is considering
going 50 basis points next Wednesday should probably abandon
that expectation," said Tom Simons, a money market economist at
Jefferies in New York.
The Dow Jones Industrial Average .DJI rose 51.47 points,
or 0.19%, to 27,192.45, the S&P 500 .SPX gained 22.19 points,
or 0.74%, to 3,025.86 and the Nasdaq Composite .IXIC added
91.67 points, or 1.11%, to 8,330.21.
A rally in large-cap stocks pushed European shares higher,
as positive earnings and a surge in Vodafone Group VOD.L
shares spurred a recovery from Thursday's sell-off, which was
driven by the European Central Bank leaving interest rates
unchanged. The pan-European STOXX 600 index .STOXX rose 0.31% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.29%.
Bucking the trend, emerging-market assets slipped as
investors shied away from riskier assets after ECB President
Mario Draghi gave a rosier-than-expected economic outlook.
Emerging market stocks lost 0.50%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.69%
lower, while Japan's Nikkei .N225 lost 0.45%.
The dollar index, which measures the greenback against other
world currencies, climbed to a two-month high, marking its
second straight weekly advance. The dollar index .DXY rose 0.2%, with the euro EUR= down
0.18% to $1.1125.
The Japanese yen weakened 0.05% versus the greenback at
108.71 per dollar, while Sterling GBP= was last trading at
$1.2386, down 0.55% on the day.
U.S. Treasuries were steady after yields briefly inched
higher following the U.S. Commerce Department's
better-than-expected GDP report. Benchmark 10-year notes US10YT=RR last /32 in price to
yield 2.0738%, from 2.074% late on Thursday.
The 30-year bond US30YT=RR last rose 6/32 in price to
yield 2.5944%, from 2.603% late on Thursday.
Oil prices inched higher and closed up for the week as
healthy economic data brightened the crude demand outlook, and
as concerns persisted over the safety of oil transport around
the Strait of Hormuz. U.S. crude oil futures CLc1 settled at $56.20 per barrel,
up 0.32%, while Brent crude oil futures LCOc1 settled at
$63.46 per barrel, a 0.11% advance.
Spot gold XAU= added 0.2% to $1,417.04 an ounce.
Copper CMCU3 lost 0.68% to $5,966.00 a tonne.
Three-month aluminum on the London Metal Exchange CMAL3
lost 1.07% to $1,806.50 a tonne.