(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

*

Bank stocks rise as Powell speaks

*

S&P 500 notches 35th record closing high this year

*

Indexes: Dow down 0.08%, S&P up 0.20%, Nasdaq up 0.23%

(Updated at 12:05 p.m. ET/1605 GMT)

By Lisa Pauline Mattackal and Ankika Biswas

July 9 (Reuters) -

The S&P 500 and the Nasdaq hovered at record highs on

Tuesday, propelled by gains in Nvidia ( NVDA ) and other megacaps, as

U.S. Federal Reserve Chair Jerome Powell testified before

Congress that more "good" economic data would strengthen the

case for rate cuts.

AI-chip favorite Nvidia ( NVDA ) jumped 2.4%, while Applied

Materials ( AMAT ) and Micron Technology ( MU ) gained 1.5% and

1.1%, respectively, briefly steering the Philadelphia SE

Semiconductor index to a record high.

The S&P 500 Information Technology Index also hit

an all-time high. Megacaps including Alphabet Meta

Platforms and Tesla rose between 0.3% and

3.6%.

Monday marked the 35th instance of the S&P 500 setting a

fresh closing record this year, as sharp gains in AI-linked and

other tech shares kept equity sentiment bright, offsetting the

uncertainty around the Fed's rate-cut path.

However, the Dow Jones underperformed, with a more

than 1% fall in Salesforce ( CRM ) and Microsoft ( MSFT ) being

the biggest drags, while the rate-sensitive small-cap Russell

2000 dropped 0.4%.

In his testimony before Congress, Powell said that while

inflation "remains above" the 2% soft-landing target, it

has been improving

in recent months and "more good data would strengthen" the

case for interest-rate cuts.

However,

the central bank chief

insisted he was not "sending any signals about the timing

of any future actions".

"It does sound like Powell is just looking for a few

more months of decent inflation data in order to have the

confidence to start cutting, so that could put a September rate

cut in play," said Brian Jacobsen, chief economist at Annex

Wealth Management.

Markets have stuck to pricing in 50 basis points of

easing for the year, seeing a nearly 72% chance for a 25 bps cut

by the Fed's September meeting, according to CME's FedWatch.

Those bets were at under 50% a month ago.

Crucial inflation data is also due this week, including

Thursday's consumer price index and the producer price index

reading on Friday.

Investors also await the start of the second-quarter

corporate earnings season this week, with big banks due to

report on Friday.

Analysts, on average, see S&P 500 companies increasing their

aggregate earnings per share by 10.1% in the second quarter, up

from an 8.2% increase in the first quarter, according to LSEG

I/B/E/S data.

At 12:05 a.m. ET, the Dow Jones Industrial Average

was down 28.51 points, or 0.07%, at 39,316.28, the S&P 500

was up 10.96 points, or 0.20%, at 5,583.81, and the

Nasdaq Composite was up 42.88 points, or 0.23%, at

18,446.62.

Major banks including Citigroup ( C/PN ), JPMorgan Chase ( JPM )

and Bank of America ( BAC ) rose between 1.7% and 2.8%

as Powell spoke. Reuters reported that the Fed was considering a

rule change

that could save big banks billions of dollars in capital.

Among single movers, Tempus AI ( TEM ) reversed early

gains after multiple brokerages including J.P.Morgan and Morgan

Stanley initiated coverage of the stock with bullish ratings.

The stock was last down 3%.

Declining issues outnumbered advancers for a 1.44-to-1

ratio on the NYSE, and by a 1.38-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and 13 new

lows, while the Nasdaq recorded 46 new highs and 110 new lows.