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US STOCKS-Wall St slightly higher on Microsoft results, rate cut hopes

* Microsoft rises after solid growth in cloud business

* Technology biggest boost to S&P 500

* Kansas City Southern gains on profit beat

* American Express falls as expenses rise

* Indexes up: Dow 0.30%, S&P 0.11%, Nasdaq 0.18% (Updates to early afternoon)

By Medha Singh

July 19 (Reuters) - Wall Street's main indexes edged higher on Friday after solid results from technology giant Microsoft added to an upbeat mood following hints from a top Federal Reserve official that a U.S. interest rate cut could be imminent.

Microsoft Corp, the most valuable U.S. company, rose 1.5% as strength in its cloud business helped it beat estimates at the end of a week of mixed earnings.

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The gains also lifted the technology sector 0.53%, making it one of the six major S&P indexes trading higher.

"Microsoft is a sign that not all companies are suffering from the downturn we're seeing in manufacturing or the pressure from interest rates that's affecting financials," said Jeff Kleintop, chief global investment strategist, at Charles Schwab in Boston.

Second-quarter profits at S&P 500 companies are now estimated to rise 1%, according to Refinitiv IBES data, in a reversal from earlier expectations of a small drop.

Remarks from the New York Fed President John Williams, a permanent voting member of the Fed's policy setting committee, that the U.S. central bank cannot wait for economic disaster to unfold and must add stimulus early were behind Thursday's positive close.

Traders have raised bets for a larger, half-percentage point cut in rates at the July 30-31 policy meeting to 43%, from a 23% chance a week ago, according to CME Group's FedWatch program.

Gains in Boeing Co also propped up the blue-chip Dow Industrials and the benchmark S&P 500.

The planemaker disclosed it would take a $4.9 billion after-tax hit due to estimated disruptions from the grounding of its 737 MAX, but shares gained 4.2% indicating that investors had expected worse.

At 12:35 p.m. ET, the Dow Jones Industrial Average was up 81.07 points, or 0.30%, at 27,304.04, the S&P 500 was up 3.24 points, or 0.11%, at 2,998.35. The Nasdaq Composite was up 14.53 points, or 0.18%, at 8,221.77.

The main indexes have eased off all-time highs hit at the start of this week as some of the first batches of second-quarter earnings releases pointed to a slowdown in growth under the shadow of U.S.-China trade tensions.

The defensive real estate and utilities sectors posted the biggest losses.

Kansas City Southern shares rose 3.8% after the railroad operator posted a better-than-expected quarterly profit. Its shares helped the Dow Jones Transport index gain about 0.94%.

Credit card issuer American Express Co slipped 2.3% after warning of higher operating costs this year as it spends heavily on rewards programs to attract customers.

Advancing issues outnumbered decliners for a 1.30-to-1 ratio on the NYSE and a 1.21-to-1 ratio on the Nasdaq.

The S&P index recorded 45 new 52-week highs and five new lows, while the Nasdaq recorded 64 new highs and 63 new lows. (Reporting by Medha Singh and Uday Sampath in Bengaluru; Editing by Patrick Graham, Sriraj Kalluvila and Shounak Dasgupta)