US STOCKS-S&P 500, Dow pinned at one-week highs after business activity data

Updates with mid-session trading

By Johann M Cherian and Purvi Agarwal

Nov 22 (Reuters) - The S&P 500 and the Dow hovered at levels seen more than a week ago on Friday, as investors took comfort from data pointing to robust economic activity in the world's biggest economy.

The domestically focused small-cap Russell 2000 index .RUT outperformed large-cap indexes with a 1.3% rise. The index hit a more than one-week high and was set for weekly advances of nearly 4%.

A measure of business activity raced to a 31-month high in November, boosted by hopes for lower interest rates and more business-friendly policies from President-elect Donald Trump's administration next year.

"It's the excitement about the deregulation and the Trump activity that will boost economic action, because executives start making moves ahead of things," said Eric Schiffer, chief executive officer at The Patriarch Organization.

However, Schiffer said strong economic data could make the Fed consider a slower pace of monetary policy easing.

At 11:29 a.m. ET, the Dow Jones Industrial Average .DJI rose 246.13 points, or 0.56%, to 44,116.48, the S&P 500 .SPX gained 8.99 points, or 0.15%, to 5,957.70 and the Nasdaq Composite .IXIC lost 24.53 points, or 0.13%, to 18,947.89.

Keeping a lid on gains, Alphabet GOOGL.O lost 1.7%, following on from Thursday's 4% drop, as the Department of Justice argued to a judge the company was monopolizing online search.

The S&P 500 communication services sector .SPLRCL led declines with a 0.9% loss, while a majority of the 11 sectors were in the green led by consumer discretionary stocks .SPLRCD. Tesla TSLA.O, a popular 'Trump trade', advanced 4%.

An index tracking S&P 500 value stocks .IVX outperformed with a 0.6% rise as investors rotated out of their growth peers .IGX.

On Thursday, the S&P 500 and Dow closed higher, with AI bellwether Nvidia NVDA.O managing modest gains after its quarterly forecast. On the day, Nvidia fell 3.1%.

The three main indexes are on track for weekly gains, with sentiment still strong about the positive implications Donald Trump's tax and tariff policies could have for corporates after his win in the presidential election.

Expectations on the Federal Reserve's policy move in December have recently swayed between a pause and a cut, as investors weigh the impact Trump's policies can have on price pressures.

There is a 59.6% probability the central bank will lower borrowing costs by 25 basis points, as per the CME Group's FedWatch Tool. Most brokerages also back a quarter-point cut.

Markets were also monitoring a missile exchange between Ukraine and Russia after the latter lowered its threshold for a nuclear retaliation earlier in the week.

Among top movers, Gap Inc GAP.N jumped 9.5% after the Old Navy parent raised its annual sales forecast and said the holiday season was off to a "strong start".

Intuit INTU.O lost 4.7% after the TurboTax parent projected second-quarter revenue and profit below Wall Street estimates on Thursday.

Honeywell International HON.O advanced 1% after the industrial giant said it will sell its personal protective equipment business for about $1.33 billion.

Advancing issues outnumbered decliners by a 2.9-to-1 ratio on the NYSE and by a 2.11-to-1 ratio on the Nasdaq.

The S&P 500 posted 71 new 52-week highs and no new lows while the Nasdaq Composite recorded 122 new highs and 58 new lows.

(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Krishna Chandra Eluri)

((johann.mcherian@thomsonreuters.com;))