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U.S. PCE stands at 2.2% in Aug

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Russell 2000 index up 1.5%

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Bristol-Myers gains after schizophrenia drug approval

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Costco slips after Q4 revenue misses estimates

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Indexes: Dow up 0.45%, S&P 500 down 0.06%, Nasdaq down

0.32%

(Updates to 2:21 p.m.)

By Echo Wang

Sept 27 (Reuters) -

The blue-chip Dow Jones Industrial Average hit a new record

high on Friday as investors cheered a tame inflation report that

also boosted small-cap stocks which should benefit from lower

interest rates.

Wall Street's benchmark S&P 500 index dipped, as did

the technology-heavy Nasdaq composite, but both remained near

record highs hit in recent sessions. All three indexes were

poised to secure their third consecutive week of gains.

"The market at this point..(is) pretty much pricing in a

soft landing, and pricing in that we have defeated inflation,

and that the Fed will be able to lower rates without causing a

bunch of harm to the economy", said Liz Young Thomas, head of

investment strategy at SoFi in New York.

The Commerce Department reported a moderate rise in consumer

spending while inflation pressures continued to ease.

Separately, the University of Michigan's final September reading

on consumer sentiment came in at 70.1, surpassing economists'

expectations of 69.3, according to a Reuters poll.

At 2:21 p.m. the Dow Jones Industrial Average was

up 191.49 points, or 0.45%, to 42,366.60, the S&P 500

dipped 3.51 points, or 0.06%, to 5,741.78 and the Nasdaq

Composite slipped 58.08 points, or 0.32%, to 18,132.02.

The Russell 2000 index, which tracks small caps that

fare better in a low rate environment, gained 1.5% to a one-week

high.

Eight out of the 11 S&P 500 sectors were higher, led by a

1.61% rise in energy stocks, while technology stocks

declined 0.97%.

Nvidia ( NVDA ) lost 2.56%, weighing on a dip on the

technology-heavy Nasdaq.

Investors now slightly favor a bigger 50 basis point cut at

the Fed's next meeting with a 52.1% chance, up from a coin toss

before the data, as per the CME Group's FedWatch Tool.

Cooling price pressures prompted the Fed to cut rates by 50

bps last week. Focus will now shift to a slew of labor market

reports due next week.

Markets will parse through remarks from Fed Governor

Michelle Bowman later in the day.

Late on Thursday, Fed Governor Lisa Cook said the central

bank's rare move earlier this month could address increased

"downside risks" to employment.

Among individual stocks, Bristol-Myers Squibb ( BMY ) surged

2.63% after the U.S. FDA approved its schizophrenia drug.

Costco Wholesale ( COST ) dropped 1.92% after posting

downbeat fourth-quarter revenue.

U.S.-listed shares of Chinese firms such as Alibaba ( BABA )

rose 2.99%, PDD Holdings ( PDD ) climbed 3.63% and NetEase ( NTES )

gained 2.73% after China's central bank lowered

interest rates and injected liquidity into the banking system.

The optimism spilled over to miners such as Arcadium

, which added 2.31%, and U.S.-listed shares of BHP

rose 1.83%.

Advancing issues outnumbered decliners by a 1.99-to-1

ratio on the NYSE. There were 519 new highs and 24 new lows on

the NYSE.

The S&P 500 posted 40 new 52-week highs and no new lows

while the Nasdaq Composite recorded 70 new highs and 59 new

lows.