* Defense stocks gain on U.S.-Saudi Arabia arms deal
* General Dynamics, Raytheon, Lockheed hit record highs
* Oil prices higher on OPEC output cut hopes
* Ford gains on CEO change, broader management shake-up
* Indexes up: Dow 0.46 pct, S&P 0.48 pct, Nasdaq 0.69 pct (Updates to early afternoon)
By Tanya Agrawal
May 22 (Reuters) - Wall Street extended gains in early afternoon trading on Monday, boosted by technology shares and as defense companies rose after the United States and Saudi Arabia signed a multi-billion dollar arms deal.
President Donald Trump visited Saudi Arabia over the weekend and sealed $110 billion in deals through which Riyadh will buy U.S. arms to help it counter Iran, with options running as high as $350 billion over 10 years.
Shares of defense firms General Dynamics, Raytheon , and Lockheed Martin all hit record highs before easing to trade up between 0.6 percent and 1.6 percent. Boeing was up 1.5 percent and the biggest boost on the Dow.
“The bar for success has been set extremely low for President Trump and it seems that he’s been able to meet that over the weekend,” said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.
Trump’s visit is his first foreign trip since taking office and one the White House hopes will shift the focus away from domestic controversies such as his firing of a former FBI head last week and reports of his administration’s links to Russia.
“Because we were down last week because of political news, the inverse is true too: that nothing bad happened over the weekend in political news,” Forrest said.
At 12:36 p.m. ET (1636 GMT) the Dow Jones Industrial Average was up 94.7 points, or 0.46 percent, at 20,899.54, the S&P 500 was up 11.55 points, or 0.48 percent, at 2,393.28 and the Nasdaq Composite was up 42.09 points, or 0.69 percent, at 6,125.79.
Gains were broad based, with ten of the eleven S&P sectors trading higher, led by the tech sector’s 0.83 increase and the industrials index’s 0.67 percent rise.
Amazon, Microsoft and Apple were the biggest drivers on the S&P and the Nasdaq.
While the strong earnings season and positive economic data will help provide support, the market will continue to be susceptible to political developments and what they mean for Trump’s agenda of tax cuts and higher infrastructure spending.
“Investors are growing skeptical,” Jack Ablin, chief investment officer at BMO Private Bank in Chicago, said in a note.
“The likelihood of President Trump’s pro-growth agenda getting signed into law is fading as the Administration and Congress fends off and sorts out the constant barrage of headlines.”
Also bolstering the market was a 0.8 percent gain in oil prices on rising confidence that top exporters will this week agree to extend supply curbs, or even deepen cuts.
Ford was up 1.7 percent at $11.05 after the automaker named James Hackett, who heads its unit developing self-driving cars, as chief executive, responding to investors’ growing unease about its stock price and prospects.
Advancing issues outnumbered decliners on the NYSE by 1,928 to 892. On the Nasdaq, 1,740 issues rose and 987 fell.
The S&P 500 index showed 39 new 52-week highs and one new low, while the Nasdaq recorded 86 new highs and 38 new lows. (Reporting by Tanya Agrawal; Editing by Savio D‘Souza)