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May PPI falls unexpectedly, weekly jobless claims at

10-month

high

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Tesla up as Musk says shareholders to approve his $56 bln

pay

package

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Broadcom ( AVGO ) soars after FY forecast raise on AI chips

strength

Indexes: Dow down 0.56%, S&P up 0.19%, Nasdaq up 0.72%

(Updated at 9:46 a.m. ET/1346 GMT)

By Lisa Pauline Mattackal and Johann M Cherian

June 13 (Reuters) - The S&P 500 and Nasdaq indexes

hovered near record highs on Thursday, lifted by a jump in chip

stocks after lower-than-forecast producer inflation data fanned

expectations of interest rate cuts from the Federal Reserve.

Nasdaq component Broadcom ( AVGO ) soared 14.3% to hit a

record high after the chipmaker raised its forecast for revenue

from semiconductors used in artificial intelligence (AI)

technology. It also announced a 10-for-1 forward stock split.

AI chip leader Nvidia ( NVDA ) rose 3.3%, pushing the

Philadelphia SE Semiconductor Index 1.5% higher to an

all-time peak.

A Labor Department report showed the U.S. producer price

index (PPI) unexpectedly fell 0.2% month-on-month in May,

compared with a 0.1% increase expected by economists polled by

Reuters.

Separately, the number of Americans filing new claims

for unemployment benefits increased to a 10-month high last

week.

Markets lifted bets on a September start to rate cuts to

nearly 68% from 60% before the data, according to the CME's

FedWatch tool. That was despite policymakers projecting only one

rate cut this year.

Investor sentiment was also supported by

softer-than-expected U.S. consumer inflation data on Wednesday

and Fed Chairman Jerome Powell's acknowledgement that progress

had been made in tackling price pressures.

"PPI was a good number ... it speaks to the Fed's

comments that inflation has shown signs of moderating, but they

still need to see more signs of moderation in inflation," said

Robert Pavlik, senior portfolio manager at Dakota Wealth.

"But we're moving in the right direction and it speaks to

the potential for a rate cut of most likely in September."

UBS Global Research said it now expects the Fed to cut

interest rates in December instead of September, while Goldman

Sachs and Morgan Stanley continue to expect the first cut in

September.

Also on tap, New York Fed President John Williams will

moderate a panel later in the day.

Benchmark Treasury yields extended losses from the previous

session, helping lift stocks further.

At 9:46 a.m. ET, the Dow Jones Industrial Average was

down 215.20 points, or 0.56%, at 38,497.01, the S&P 500

was up 10.28 points, or 0.19%, at 5,431.31, and the Nasdaq

Composite was up 127.58 points, or 0.72%, at 17,736.02.

The technology sector led sectoral gains with a

1.6% rise, while the energy sector was among the biggest

decliners.

Amid the optimism, questions remained over whether the

economy was slowing too quickly, with the blue-chip Dow

slipping and an index of economically sensitive small-cap stocks

falling 0.4%

Tesla leapt 5.9% after Elon Musk said company

shareholders were voting to approve his $56 billion pay package

and to move the electric-vehicle maker's legal home to Texas.

Apple ( AAPL ) gained 1.5%, trading at all-time-highs after

overtaking Microsoft as the world's most valuable company

earlier in the week.

Virgin Galactic ( SPCE ) plunged 8.4%, a day after

announcing a 1-for-20 reverse stock split.

Declining issues outnumbered advancers for a 1.49-to-1 ratio

on the NYSE. Declining issues outnumbered advancers for a

1.30-to-1 ratio on the Nasdaq.

The S&P index recorded 7 new 52-week highs and 5 new lows,

while the Nasdaq recorded 29 new highs and 35 new lows.