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* S&P 500 ~2% away from all-time high
* China stimulus, Mexico tariff relief drive rally
* Symantec falls on Morgan Stanley downgrade
* Indexes up: Dow 0.49%, S&P 0.64%, Nasdaq 0.85% (Updates to open)
By Aparajita Saxena
June 11 (Reuters) - Wall Street's main indexes rose on Tuesday, led by technology stocks, on the back of easing trade tensions with Mexico and signs of more fiscal stimulus in China.
All the major S&P sectors were trading higher, with the defensive utilities and real estate sectors posting the smallest gains.
Optimism over President Donald Trump's decision late on Friday to hold off import tariffs on Mexico has helped markets this week, even though the United States warned it would impose tariffs if its demands were not satisfied.
The benchmark S&P 500 index is now just about 2% away from its early May record high and the Dow Jones Industrial Average is set to rise for the seventh straight day, its longest winning streak in 13 months.
"The global markets and the U.S. are following what is happening in China, and the undertone is that some sort of a trade deal is not far away," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"If a deal isn't reached, then we will be headed for a negative growth and the Federal Reserve will have no choice but to cut rates."
The possibility that Trump's hard bargaining on trade with Beijing and others could push the economy back into recession have spurred bets of an interest rate cut by the Fed in July, and two more this year.
Trump said on Monday he was ready to impose another round of tariffs on Chinese imports if there was no progress in talks with Chinese President Xi Jinping at the G20 summit.
Amid an escalating trade war, Beijing said it would allow local governments to use proceeds from special bonds as capital for major investment projects to support the slowing economy.
The news helped U.S. listed Chinese stocks - Alibaba Group Holdings, JD.com Inc and Baidu Inc - gain about 2%.
Marquee companies - Facebook Inc, Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc - climbed between 0.5% and 2%.
At 9:56 a.m. ET, the Dow Jones Industrial Average was up 126.80 points, or 0.49%, at 26,189.48. The S&P 500 was up 18.54 points, or 0.64%, at 2,905.27 and the Nasdaq Composite was up 66.37 points, or 0.85%, at 7,889.54.
Meanwhile, U.S. Treasury yields ticked higher after data showed producer prices increased solidly for a second straight month in May, pointing to a steady pickup in underlying inflation pressures.
Interest-rate sensitive banking stocks gained 0.66% and the broader financial sector rose 0.86%.
Among decliners, Symantec Corp fell 3.2%, the most among S&P companies, after Morgan Stanley downgraded the antivirus software maker's stock, citing increased competition.
Raytheon Co declined 2.6% after Vertical Research downgraded shares of the U.S. contractor to "hold".
Advancing issues outnumbered decliners by a 3.61-to-1 ratio on the NYSE and by a 2.54-to-1 ratio on the Nasdaq.
The S&P index recorded 47 new 52-week highs and no new low, while the Nasdaq recorded 46 new highs and 30 new lows. (Reporting By Aparajita Saxena and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur)