(Updates to afternoon trading, adds market details)

Lilly becomes first drugmaker to join trillion-dollar club

Indexes up: Dow 1.7%, S&P 500 1.8%, Nasdaq 1.9%

NEW YORK, Nov 21 (Reuters) – U.S. stocks were sharply higher on Friday as traders boosted bets on an interest rate cut by the Federal Reserve next month following remarks from policymakers and as shares of Nvidia rose following a report that the U.S. was considering letting Nvidia sell H200 chips to China. Shares of Nvidia were up 1.4% after Reuters reported, citing people familiar with the matter, that the Trump administration is considering greenlighting sales of Nvidia’s H200 AI chips to China. New York Fed President John Williams, a voting member of the Federal Open Market Committee, said the central bank can still cut rates “in the near term” without putting its inflation goal at risk.

Traders now see a more than 70% chance that the Fed will cut its main lending rate by 25 basis points in December, up from a near 37% chance seen earlier in the day, according to the CME FedWatch Tool.

“The big tailwind today is that shift in rate cut odds for the December Fed meeting,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

The Dow Jones Industrial Average rose 798.49 points, or 1.74%, to 46,550.75, the S&P 500 gained 117.44 points, or 1.80%, to 6,656.20 and the Nasdaq Composite gained 426.50 points, or 1.93%, to 22,504.55.

Stocks have been volatile in the past two sessions, reflecting heightened investor anxiety over sky-high valuations in the technology sector and over what will happen at the December Fed meeting.

Boston Fed President Susan Collins said on CNBC policy was “in the right place,” indicating skepticism about the need for another rate cut. Her stance contrasts with dovish signals from some peers, a divergence that could stoke market volatility ahead of the December meeting. Global brokerages remained divided over the likelihood of a December rate cut after Thursday’s release of the long-delayed September jobs report, which marks the last employment reading before the Fed’s verdict next month.

Eli Lilly shares hit a record and were up 2% after the company became the first drugmaker to touch a $1 trillion market capitalization.

Alphabet shares were sharply higher as well on Friday and last up 4.3%.

Advancing issues outnumbered decliners by a 3.83-to-1 ratio on the NYSE. There were 60 new highs and 200 new lows on the NYSE.

On the Nasdaq, 3,536 stocks rose and 1,129 fell as advancing issues outnumbered decliners by a 3.13-to-1 ratio.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Maju Samuel and Matthew Lewis)