US STOCKS-Wall Street eyes record open as Middle East tensions fade

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* Easing geopolitical tensions spur risk-on mood

* FAANG stocks rise on positive brokerage comments

* Kohl’s slides after downbeat FY earnings forecast

* Futures up: Dow Dow 0.39%, S&P 0.35%, Nasdaq 0.60% (Updates prices, adds comment)

Jan 9 (Reuters) - U.S. stocks were set to open at record levels on Thursday after the United States and Iran pulled back from new military action, while firming optimism about a U.S.-China trade deal added to the upbeat mood.

China’s commerce ministry said on Thursday that Vice Premier Liu He will sign a Phase 1 trade deal in Washington next week, raising hopes that a prolonged tariff war between the two sides will come to a close.

After a wobbly start in the new year on fears of an all-out conflict in the Middle East, nerves eased on Wednesday as Washington and Tehran looked to defuse the crisis after Iran’s retaliatory attack following the killing of a top general.

“While geopolitical risks can trigger bouts of short-term volatility, investors should not ignore the recent improvements in selected economic indicators and earnings,” strategists at Eastspring Investments said in a client note.

“Should the nascent recovery in the global economy continue, further upside in global markets is still possible.”

After a better-than-expected private payrolls report on Wednesday, investors are awaiting Friday’s jobs report as well as fourth-quarter reports. Big U.S. banks will kick off the quarterly earnings season next week.

Earnings for the S&P 500 companies are expected to drop 0.6% in their second consecutive decline, according to Refinitiv IBES data.

At 8:47 a.m. ET, Dow e-minis were up 113 points, or 0.39%. S&P 500 e-minis were up 11.5 points, or 0.35% and Nasdaq 100 e-minis were up 53.5 points, or 0.6%.

Apple gained 1.3% after government data showed iPhone sales in China in December jumped more than 18% year on year. Meanwhile, Jefferies raised its price target on the stock by $65 to $350.

Jefferies also upgraded Snap Inc to “buy” as it expects improving user growth in international markets. The company’s shares rose 4%.

Alphabet, Facebook and Twitter rose between 0.8% and 1.7% as Cowen Equity Research raised its price target on the stocks after the brokerage’s survey of U.S. ad buyers showed upbeat spending in 2020.

Starbucks Corp rose 1.7% after Barclays raised the stock to “over weight”, while Advanced Micro Devices Inc gained 2.2% after Mizuho recommended “buy” on the stock, citing an improving server market in 2020.

Shares in Kohl’s Corp slid 7.9% after the department store operator forecast full-year earnings at the bottom end of an already lowered target. J C Penney Co Inc dropped 2.5% after disappointing same-store sales numbers. (Reporting by Sruthi Shankar in Bengaluru Editing by Saumyadeb Chakrabarty and Maju Samuel)