*

Fed's preferred inflation PCE data due on Friday

*

Nvidia ( NVDA ) on track for third straight declining session

*

Oil companies advance on expectations of higher demand

(Updates to 4:00pm ET)

By Ankika Biswas, Lisa Pauline Mattackal and Carolina Mandl

June 24 (Reuters) -

Stocks in a variety of sectors rallied on Monday and the

blue-chip Dow Jones Industrial Average ended at a one-month high

as investors rotated out of AI-linked stocks and added some

laggards to their portfolios, betting on Federal Reserve

interest rate cuts this year.

The S&P 500 and Nasdaq ended lower on the rotation out

of technology stocks whose outsized gains have led this year's

rally. Nvidia ( NVDA ) slid for a third session, as market

watchers cited profit taking in the semiconductor bellwether

after last week's meteoric rise made it the world's most

valuable company.

Other chip stocks including U.S. shares of Taiwan

Semiconductor Manufacturing ( TSM ), Broadcom ( AVGO ), Marvell

Technology ( MRVL ) and Qualcomm ( QCOM ) dropped, dragging the

chip stocks index down.

"The market's selling some of the winners and buying

some of the laggards here," said Jack Janasiewicz, lead

strategist at Natixis Investment Managers. "It's a little bit of

a nod to looking out over the inflation data that is coming out

on Friday, as expectations are for a pretty soft print."

Technology and the consumer discretionary were

the only two decliners among the 11 S&P 500 sector indexes,

while the energy sector was the top outperformer.

"There's been a rotation into some of the value areas of

the market like financials, energy, and utilities. Energy has

the additional benefit of a little bit of a jump in oil prices,"

said Ed Clissold, chief U.S. strategist at Ned Davis Research.

Oil prices rose on Monday spurred by

stronger fuel demand

expectations, shares of

energy and oil field services companies

rose.

The Dow Jones Industrial Average jumped and

registered a five-day winning streak. The small-caps index

Russell 2000 also hit its highest in over a week,

signaling broader market gains.

Except for Nvidia ( NVDA ) and other chip stocks, "the rest of

the market is behaving positively on the expectation that we're

still on course for a soft landing base case," said Carl

Ludwigson ,managing director at Bel Air Investment Advisors.

The biggest event on investors' radar for the week is

Friday's personal consumption expenditures (PCE) price index

report, the Fed's preferred measure of inflation, expected to

show a moderation in price pressures.

Investors still expect about two rate cuts this year,

pricing in a 61% chance of a 25-basis-point cut in September, as

per LSEG's FedWatch. The Fed's own latest projection is for one

rate cut likely in December.

San Francisco Fed President Mary Daly said she does not

believe the U.S. central bank should cut rates before

policymakers are confident inflation is headed toward 2%.

According to preliminary data, the S&P 500

lost 15.73 points, or 0.29%, to end at 5,448.89 points,

while the Nasdaq Composite lost 190.19 points, or 1.09%,

to 17,499.17. The Dow Jones Industrial Average

rose 257.99 points, or 0.66%, to 39,408.32.

Other data this week include durable goods, weekly jobless

claims and final first-quarter GDP figures, the annual Russell

index reconstitution. Some quarterly earnings reports also are

due.

On Thursday, President Joe Biden will debate Republican

rival Donald Trump in Atlanta, which could influence the outcome

of a race for the November election that opinion polls show as

neck-and-neck.

Meta Platforms ( META ) rose after a report the Facebook

parent has discussed integrating its generative AI model into

Apple's ( AAPL ) recently announced AI system for iPhones.

Apple's ( AAPL ) shares also climbed.

RXO leapt on plans to buy United Parcel Service's ( UPS )

Coyote Logistics business unit for $1.025 billion.