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Markets to close at 1 pm ET in curtailed trading session

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American Airlines ( AAL ) briefly grounds flights due to technical

issue

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Indexes: Dow up 0.08%, S&P 500 up 0.36%, Nasdaq up 0.59%

(Updates after markets open)

By Medha Singh and Purvi Agarwal

Dec 24 (Reuters) -

Wall Street's main indexes rose on Tuesday in a truncated

trading session before Christmas, with the S&P 500 and the

Nasdaq up for the third consecutive day, helped by gains in a

handful of megacap and growth stocks.

Broadcom ( AVGO ) and Nvidia ( NVDA ) provided the biggest

boost to the indexes, advancing 2.7% and 0.7%, respectively,

while Consumer Discretionary and Technology

led gains among S&P 500 sectors.

With few major catalysts, thin trading volumes expected

in the final days of the year raised the prospect of choppy

trading.

Stock markets will shut at 1:00 p.m. ET on Tuesday and will

be closed for Christmas on Wednesday.

At 09:42 a.m. the Dow Jones Industrial Average rose

32.38 points, or 0.08%, to 42,939.33, the S&P 500 gained

21.68 points, or 0.36%, to 5,995.75, and the Nasdaq Composite

gained 116.55 points, or 0.59%, to 19,881.43.

"Investors are breathing a sigh of relief that maybe the

hawkish rate cut last week combined with the softer PCE reading

indicate that inflation is not that big of a re-emerging

threat," said Sam Stovall, chief investment strategist of CFRA

Research.

"As a result, maybe this market will end up creeping

higher between now and the end of the year."

After a stellar run to record highs following the November

election, which sparked hopes of pro-business policies under

U.S. President-elect Donald Trump, Wall Street's rally hit a

bump this month as investors grappled with the prospect of

higher interest rates in 2025.

The U.S. Federal Reserve eased borrowing costs for the third

time this year last Wednesday, but signaled only two more

25-basis-point reductions next year, down from its September

projection of four cuts, as policymakers weigh the possibility

of Trump's policies stoking inflation.

Traders expect the Fed to leave rates in the range of 4% to

4.25% by the end of 2025, from between 3.75% and 4% about 10

days ago, according to CME's FedWatch tool.

Markets are currently in a historically strong period called

the "Santa Claus rally". The S&P 500 on average has gained 1.3%

in the last five days of December and first two days of January,

according to data from the Stock Trader's Almanac going back to

1969.

However, market participants are questioning if U.S. stocks'

climb to new record highs will be attainable in the coming days,

amid concerns about sky-high valuations and the market's overall

health.

The benchmark S&P 500 fell about 1% in December but

the equal-weight S&P 500, a proxy for the average index

stock, is down 5.8%.

NeueHealth ( NEUE ) soared 64% after the healthcare provider

said New Enterprise Associates, its largest shareholder, and a

group of existing investors will take the company private in a

$1.3 billion deal.

American Airlines' ( AAL ) shares were down 1.9% after the

carrier briefly grounded all its flights in the United States

due to an unspecified technical issue.

Declining issues outnumbered advancers by a 1.21-to-1

ratio on the NYSE, and by a 1.07-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and no new

lows, while the Nasdaq Composite recorded 17 new highs and 31

new lows.