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* Growth stocks set to outperform value for the second week

* Honeywell gains as brokerages raise price targets

* Dow up 0.4%, S&P 500 up 0.32%, Nasdaq up 0.10% (Updates to mid-afternoon, changes byline)

By Chuck Mikolajczak

April 9 (Reuters) - The S&P 500 and the Dow climbed to record highs on Friday, buoyed in part by gains in growth stocks, but gains were muted ahead of the start of quarterly earnings season next week.

Growth names have found their footing over the past two weeks after being outperformed by value stocks for most of the year. A pullback in the 10-year U.S. Treasury yield from a 14-month high hit in late March boosted confidence in economic growth.

Data showed U.S. producer prices increased more than expected in March, bringing the largest annual gain in 9-1/2 years.

Many investors now expect higher inflation as vaccine rollouts help the U.S. economy rebound from coronavirus-fueled lockdowns, yet stocks showed little concern over the data as the Federal Reserve has maintained it will allow inflation to overshoot its target.

"I can understand why investors would say I am not going to get freaked out price-wise because the reflation trade will be beneficial to earnings," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"They are taking the bad with the good, the good being if the economy is going to go up and earnings are going to increase, hey I will take some inflation with that, because I don’t think the inflation is going to undo any of the profit margin expansion that I expect to see."

The Dow Jones Industrial Average rose 134.94 points, or 0.4%, to 33,638.51, the S&P 500 gained 13.22 points, or 0.32%, to 4,110.39 and the Nasdaq Composite added 14.43 points, or 0.1%, to 13,843.74.

The banks will kick off first-quarter earnings season next week, and analysts expect profits for S&P 500 firms to show a 25% jump from a year earlier, the strongest performance for the quarter since 2018, according to Refinitiv IBES data.

Megacap names such as Apple, Amazon and Microsoft, which are in the growth index, advanced to pace the S&P 500. Amazon shares rose 1.96% as warehouse workers in Alabama rejected an attempt to form a union.

The Russell 1000 growth index, made up largely of technology stocks, is poised to outperform its value counterpart, made up mostly of cyclical stocks such as financials and energy names, for a second week following the recent pullback in longer-dated Treasury yields.

Bank of America's weekly fund flow figures showed investors have pumped more money into equities over the past five months than in the last 12 years.

Honeywell gained about 2.44% to help lift the Dow as Jefferies and J.P. Morgan raised their price targets on the U.S. aero parts maker's shares.

Declining issues outnumbered advancing ones on the NYSE by a 1.02-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored decliners.

The S&P 500 posted 45 new 52-week highs and no new lows; the Nasdaq Composite recorded 67 new highs and 39 new lows. (Reporting by Chuck Mikolajczak; Editing by David Gregorio)