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* December trade deficit falls to $44.3 bln vs. est. $45 bln
* Michael Kors drops to more than one-year low on forecast cut
* S&P less than three points away from all-time high
* Indexes up: Dow 0.40 pct, S&P 0.23 pct, Nasdaq 0.41 pct (Adds details, changes comment, updates prices)
By Yashaswini Swamynathan and Tanya Agrawal
Feb 7 (Reuters) - U.S. stocks were higher in later morning trading on Tuesday, with the Dow Jones Industrial Average and the Nasdaq Composite hitting record levels and the S&P 500 coming within spitting distance of yet another all-time high.
Markets have rallied sharply after Trump's election victory in November, riding on hopes that his plans including simpler regulations, higher infrastructure spending and tax cuts will boost the economy.
However, the lack of details regarding economic policies and Trump's focus on isolationist policies, including a travel ban on seven mainly Muslim nations, have also made investors cautious.
With the earnings season at its peak, stock valuations are in focus given the run-up in shares. The S&P 500 is trading at 17.7 times forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
Fourth-quarter earnings are estimated to have risen 8.2 percent - the best in nine quarters.
"We've been getting some back and forth between the new administration's business-friendly policies versus the disruptions economically and politically from the immigration and trade-related issues," said Jason Pride, director of investment strategy at Glenmede in Philadelphia.
"However, at the end of the day, the expansion is continuing, the economy and earnings are growing and that should support equities."
A report from the U.S. Commerce Department showed trade deficit fell more than expected in December as exports rose to their highest level in more than 1-1/2 years, outpacing an increase in imports.
At 11:03 a.m. ET (1603 GMT), the Dow Jones industrial average was up 80.77 points, or 0.4 percent, at 20,133.19.
The S&P 500 was up 5.34 points, or 0.23 percent, at 2,297.9 and the Nasdaq Composite was up 22.95 points, or 0.41 percent, at 5,686.51.
Seven of the 11 major S&P sectors were higher, with technology index's 0.58 percent rise and industrials' 0.56 percent gain leading the advancers.
Apple's 1.3 percent rise provided the biggest boost to the S&P and the Nasdaq, while Boeing's 1.9 percent rise helped lift the Dow.
Shares of Michael Kors dropped as much as 15.4 percent to a more than one-year low of $34.92, after the handbag maker cut its full-year revenue forecast.
Health insurer Centene was up 5.3 percent at $66.99 following better-than-expected quarterly revenue and profit.
General Motors slipped 4.5 percent to $35.22 after the automaker said fourth-quarter net income fell partly because of $500 million in foreign exchange losses. The stock was the biggest drag on the S&P.
Twenty-First Century Fox fell 1.9 percent to $30.48 after its quarterly revenue missed Wall Street expectations.
Advancing issues outnumbered decliners on the NYSE by 1,576 to 1,170. On the Nasdaq, 1,535 issues rose and 1,077 fell.
The S&P 500 index showed 25 new 52-week highs and two new lows, while the Nasdaq recorded 73 new highs and 25 new lows. (Reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru; Editing by Anil D'Silva)