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U.S. retail sales rise less than expected in May

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Lennar ( LEN ) drops as home delivery forecast disappoints

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Citigroup ( C/PN ) hikes S&P 500 year-end target to 5,600 points

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Indexes up: Dow 0.15%, S&P 0.25%, Nasdaq 0.03%

(Updates with more closing data)

By Echo Wang

June 18 (Reuters) -

The S&P 500 and Nasdaq closed at record highs on Tuesday,

buoyed by Nvidia's ( NVDA ) continued surge to new peaks, while the Dow

ended barely higher in subdued pre-holiday trading following

softer-than-expected U.S. retail sales data.

Nvidia ( NVDA ) overtook Microsoft ( MSFT ) to become the

world's most valuable company, ending the day with a market

capitalization of $3.22 trillion.

Other chip stocks also extended their recent rallies,

boosting the Philadelphia SE Semiconductor index to a

record high.

Qualcomm ( QCOM ), Arm Holdings and Micron

advanced between 2.1% and 8.7%, with Micron hitting a

record high.

"It's really the AI story," said Ty Draper, financial

advisor at Beacon Capital Management in Franklin, Tennessee.

The Nasdaq notched a seventh record closing high in a row,

as gains in many chip stocks offset losses in Alphabet

, Amazon ( AMZN ) and Meta Platforms ( META ).

Retail sales rose 0.1% in May, versus the 0.3% growth

forecast by economists polled by Reuters, while another report

showed surprisingly strong May industrial production and

manufacturing output.

Following the news, markets slightly increased bets on two

Federal Reserve interest rate cuts this year, LSEG's FedWatch

showed, despite U.S. central bankers' most recent projections

for just one easing.

Financial and technology led advances

among the 11 S&P 500 sectors, up 0.64% and 0.61% respectively,

while communication services and consumer

discretionary were the biggest losers.

Fed officials' comments on Tuesday offered nothing

compelling to trade on. New York Fed President John Williams

said rates will gradually come down, while Richmond Fed's Thomas

Barkin said he required more months of economic data before

supporting a rate cut.

Some market observers noted nothing surprising emerged.

"That's why the markets stay unchanged today," said Jim Awad,

senior managing director at Clearstead Advisors LLC in New York.

U.S. markets will be closed on Wednesday for the Juneteenth

holiday.

Hopes for multiple rate cuts this year, excitement for

AI-related companies and robust earnings from other tech firms

have bolstered equities in recent months, with gains

concentrated in a few heavily weighted stocks.

Citigroup ( C/PN ) raised the year-end target for the S&P 500

to 5,600 points from 5,100.

The Dow Jones Industrial Average rose 56.76

points, or 0.15%, to 38,834.86. The S&P 500 climbed 13.80

points, or 0.25%, to 5,487.03 and the Nasdaq Composite

gained 5.21 points, or 0.03%, at 17,862.23.

Shares of education technology provider Chegg ( CHGG ) rose

3.45% after announcing job cuts in a restructuring.

Homebuilder Lennar ( LEN ) fell 4.98% after forecasting

lower-than-expected third-quarter home deliveries.

Advancing issues outnumbered decliners by a 1.79-to-1 ratio

on the NYSE, which had 259 new highs and 93 new lows.

Volume on U.S. exchanges was 10.96 billion shares,

compared with the 11.79 billion average for the full session

over the last 20 trading days.