(Updates prices after U.S. market close, adds analyst comment)

By Sinéad Carew and Ankika Biswas

June 25 (Reuters) - The Nasdaq rallied on Tuesday,

buoyed by strength in Nvidia ( NVDA ) and other tech megacaps,

while the Dow slipped as retailers weighed and investors waited

for crucial inflation data due out this week.

AI chip firm Nvidia ( NVDA ) rose sharply after a three-session

sell-off and the broader chip sector outperformed with the

Philadelphia Semiconductor index gaining ground.

Chips were among the biggest boosts for the S&P 500

technology index's recovery from a three-day slide

while companies such as Alphabet and Meta Platforms ( META )

supported the communication services index.

The rest of the S&P 500's 11 major industry sectors were

much weaker by comparison on Tuesday in contrast with the prior

day's session when previously lagging sectors such as

energy and utilities were the biggest gainers.

"Seeing the tech stocks perking up has been a key driver"

for Tuesday's market, said Emily Roland, co-chief investment

strategist at John Hancock Investment Management. She added that

after a few days of weakness, "investors that have scooped up

some of those names today were looking for a better entry

point."

Potentially adding to the bias for megacaps was the

Conference Board's survey, which showed U.S. consumer confidence

easing slightly in June amid worries about the economic outlook.

Its consumer confidence index fell to 100.4 from a downwardly

revised 101.3 in May.

"In an environment where economic growth is potentially

decelerating, which we're seeing signs of, that would tend to

benefit higher-quality stocks that have less sensitivity to the

economic cycle," Roland said.

According to preliminary data, the S&P 500

gained 21.55 points, or 0.42%, to end at 5,469.42 points,

while the Nasdaq Composite gained 220.84 points, or

1.26%, to 17,721.57. The Dow Jones Industrial Average

fell 293.20 points, or 0.74%, to 39,118.01.

The Dow pulled back from a one-month high hit on Monday.

Home improvement retailer Home Depot ( HD ) was among the Dow's

biggest percentage decliners during the session.

Retail giant Walmart ( WMT ) shares also fell after its CFO

flagged the second quarter as the "most challenging quarter" at

the NYSE 2024 European Investor Conference in London.

The Dow Jones Transport Average dropped after recent

gains, with freight rail company Norfolk Southern ( NSC ) among

the weakest after a dimmer analyst view and a National

Transportation Safety Board review of a derailment last year.

Transport heavyweight FedEx ( FDX ) was due to report

quarterly results after the close.

The most anticipated economic data due this week is the

personal consumption expenditures (PCE) price index - the Fed's

preferred inflation gauge - on Friday.

Spirit AeroSystems ( SPR ) shares fell after a media report

on Monday said Boeing ( BA ) offered to acquire the airplane

fuselage maker in a deal funded mostly by stock that values its

key supplier at about $35 per share. Boeing ( BA ) shares also fell.

Cruise operator Carnival Corp ( CCL ) rallied after raising

its annual profit forecast for the second time this year.