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GameStop ( GME ) rallies, sparks gains in other meme stocks

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Alphabet OpenAI to launch search competitor

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Indexes: S&P 500 off 0.04%, Nasdaq adds 0.27%, Dow off

0.15%

(Updates with final prices, volume data)

By Sinéad Carew and Sruthi Shankar

May 13 (Reuters) - The S&P 500 closed very slightly

lower on Monday as investors took a breather after three weekly

gains while they awaited key inflation readings and earnings

reports due this week while a survey showed consumers concerned

about inflation.

A Federal Reserve Bank of New York survey, released on

Monday, found that Americans see inflation at 3.3% a year from

now from March's 3% while they expect inflation three years from

now at 2.8%. This followed a University of Michigan report on

Friday that showed U.S. consumer sentiment sagged to a six-month

low in May as households worried about the cost of living.

Last week the Nasdaq composite and the S&P 500 both

registered their third straight weeks of gains, boosted by

strong earnings reports and signs of a cooling labor market that

fueled bets of one or two Federal Reserve rate cuts this year.

But on Monday investors appeared anxious to stay clear of

making big bets ahead of April Consumer Price Index (CPI) data

due out on Wednesday. They will also preparing to monitor

producer price index data, retail sales data, weekly jobless

claims and earnings reports from big retailers Home Depot ( HD )

and Walmart ( WMT ), all due out this week.

"Investors are like somebody looking out the window trying

to see what the weather's like before deciding what to wear.

Today and tomorrow are going to be all about Wednesday's

consumer inflation report," said Burns McKinney, portfolio

manager at NFJ Investment Group in Dallas.

"In the last three months that's been the single biggest

mover. Each of these times inflation's come in a little bit

stickier than investors had expected. Each time that's happened

investors have ratcheted back expectations for interest rate

cuts."

The Dow Jones Industrial Average fell 81.33

points, or 0.21%, to 39,431.51, the S&P 500 lost 1.26

points, or 0.02%, to 5,221.42 and the Nasdaq Composite

gained 47.37 points, or 0.29%, to 16,388.24.

Anthony Saglimbene, Ameriprise chief market strategist,

said the "marked deterioration in consumer sentiment and rising

expectations around inflation" from the consumer sentiment

surveys puts even more weight on the upcoming inflation data.

"Stocks are just kind of stuck in this really tight

trading range until we get some more information on inflation

trends," said Saglimbene.

Core consumer prices are expected to have risen 0.3% on

a month-over-month basis in April and 3.6% on an annual basis

according to economist forecasts in a Reuters poll ahead of

Wednesday's release.

Fed Vice Chair Phillip Jefferson said earlier on Monday

that he supports keeping interest rates steady until it is clear

that price pressures are moderating.

Among the S&P 500's 11 major industry sectors only two

gained ground on Monday.

Technology provided the biggest boost and

Apple ( AAPL ) was its biggest index point contributor.

Investors in the sector were focused on artificial

intelligence technology with Apple ( AAPL ) shares closing up 1.8% after

a report that it had closed in on an agreement with

ChatGPT-maker OpenAI to use the startup's technology on the

iPhone.

OpenAI, which is backed by Microsoft ( MSFT ), said it would

release a new AI model capable of realistic voice conversation

and able to interact across text and image.

Alphabet, expected to show off its own new

AI-related features at its developers' conference on Tuesday,

managed to close up 0.3% after falling as much as 2.7% during

the session.

Shares of videogame retailer GameStop ( GME ) jumped soared

74% after "Roaring Kitty", a former marketer at an insurance

firm credited with sparking the 2021 meme stock rally, returned

to X.com after a three-year hiatus.

Other highly shorted names involved in the 2021 meme rally

also rose. AMC Entertainment ( AMC ) jumped 78% and Koss Corp ( KOSS )

closed up 36.7%.

On U.S. exchanges 10.09 billion shares changed hands

compared with the 10.79 billion moving average for the last 20

sessions.

Advancing issues outnumbered decliners by a 1.23-to-1

ratio on the NYSE where there were 311 new highs and 40 new

lows.

On the Nasdaq, advancing issues outnumbered decliners by

a 1.14-to-1 ratio. The S&P 500 posted 34 new 52-week highs and

no new lows while the Nasdaq recorded 145 new highs and 91 new

lows.