By Stephen Culp

NEW YORK (Reuters) -Wall Street drifted higher in light trading on Thursday, as firming bets of interest rate cuts in the coming year supported stock prices as market participants eyed a potential bull market confirmation.

All three major U.S. stock indexes were modestly green, with Apple (NASDAQ:) and Microsoft (NASDAQ:) among the interest rate sensitive stocks providing the most lift.

All three indexes remained on course for monthly, quarterly, and annual gains.

“This is one of the best end-of-year rallies we’ve ever seen and a lot of this rally happened before the Fed pivot in the middle of December,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.

“It’s a nice reminder of how far we’ve come from the depths of the bear market last year and reminder to investors that dark clouds happen, but the sun always comes out again,” Detrick added.

The continues to lurk a whisker below its record closing high of 4,796.56 reached on Jan. 3, 2022. The index was last 0.1% below that level.

Should the S&P 500 hit a new record close, that confirm the bellwether index entered a bull market when it reached the bear market closing trough in October 2022.

“Reaching new highs after two years could be a subtle sign that economic strength could be in the cards for 2024,” Detrick said.

Data released early in the day, including jobless claims, pending home sales and preliminary trade/inventories all painted a picture of a softening but resilient economy.

This scenario has helped cement bets the U.S. Federal Reserve might cut its policy rate sooner than expected and could pull off a soft landing by avoiding recession.

At last glance, financial markets have priced in a 74.1% probability policymakers will cut the Fed funds target rate by 25 basis points in March, according to CME’s FedWatch tool.

At 2:09PM ET, the rose 83.99 points, or 0.22%, to 37,740.51, the S&P 500 gained 8.16 points, or 0.17%, to 4,789.74 and the added 21.23 points, or 0.14%, to 15,120.41.

Among the 11 major sectors of the S&P 500, utilities had the largest percentage gain. Energy shares were down the most, weighed by sagging crude prices.

U.S.-listed shares of Chinese companies, including Alibaba (NYSE:) Holdings, PDD Holdings and JD (NASDAQ:).Com Inc advanced between 1.1% and 2.8% as China’s blue-chip stocks staged their biggest jump in five months.

CytoSorbents slid 38.7% after the company’s device aimed at reducing bleeding during surgery failed meet the main goal of a study.

Boeing (NYSE:) fell 0.8% after the planemaker urged airlines to inspect newer 737 MAX airplanes for a possible loose bolt in the rudder control system.

Declining issues outnumbered advancing ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.

The S&P 500 posted 42 new 52-week highs and no new lows; the Nasdaq Composite recorded 129 new highs and 33 new lows.