* Indexes: Dow up 0.31%, S&P 500, Nasdaq flat

* GlobalFoundries ( GFS ) falls on report of Mubadala share sale

* JPMorgan's ( JPM ) expense guidance hits bank stocks

* Zscaler ( ZS ) plunges after downbeat Q4 forecast

* Goldman Sachs ( GS ) lifts S&P 500 year-end forecast to 8,000

(Updates with late afternoon prices, analyst quote)

By Twesha Dikshit, Utkarsh Hathi and Saeed Azhar

May 27 (Reuters) - The S&P 500 and the Nasdaq were muted

on Wednesday in choppy trading, as investors took a pause from

the AI-led market rally, while remaining cautious on progress in

Middle East talks.

Banking stocks were down after a slide of almost 2.9% for

JPMorgan Chase ( JPM ) after CEO Jamie Dimon warned that

expenses this year could be $1 billion higher than estimated.

The White House denied reports from Iran's state TV that

Tehran would restore Strait of Hormuz shipping within a month in

exchange for a U.S. military pullback and lifting of a naval

blockade.

Still, indexes traded near record highs. The Dow Jones

nudged higher, lifted by a rotation into healthcare and consumer

stocks. However, a pullback in chip stocks weighed on the

tech-heavy Nasdaq.

At 2:12 p.m. the Dow Jones Industrial Average rose

154.75 points, or 0.31%, to 50,616.43, the S&P 500 lost

4.13 points, or 0.05%, to 7,515.11 and the Nasdaq Composite

lost 13.31 points, or 0.05%, to 26,642.87.

"After such a large run-up in the markets, it's not

surprising to me that there is a little bit of a pause," said

Sean Clark, chief investment officer of Clark Capital Management

Group.

"There's a lot of positives to look at right now. Even

though the outperformers are really being driven by tech, AI and

AI adjacent themes, I wouldn't discount the fact that the broad

market is participating as well."

Among the sub-indexes, consumer discretionary was

leading the gains, up almost 1.65%.

Meanwhile, the S&P 500 energy index fell 1.1%,

tracking a decline of as much as 5% in oil prices. Tech shares

shed 0.6% after reaching an all-time high on Tuesday.

Chip stocks were down after a strong rally. Intel ( INTC )

fell more than 3.2% and Marvell Technology ( MRVL ) fell over

3.8%, while Qualcomm ( QCOM ) shed 8%.

The Philadelphia SE Semiconductor index lost 1.8%

after hitting a record high on Tuesday, with chip giant Nvidia ( NVDA )

off 1%.

"Technology leadership remains difficult to ignore, with the

sector continuing to push to new highs on both an absolute and

relative basis compared to the broader market," said Adam

Turnquist, chief technical strategist, LPL Financial.

"That said, increasingly stretched momentum conditions and

elevated positioning raise questions around the near-term

durability of the advance."

Zscaler ( ZS ) tumbled 31% after the cloud security firm

projected fourth-quarter revenue below expectations.

Among other movers, GlobalFoundries ( GFS ) fell 10.6% after

Bloomberg News reported that majority owner Mubadala Investment

Company was seeking to raise $1.91 billion from an unregistered

block sale of GFS shares.

Bath & Body Works ( BBWI ) jumped almost 11% after reporting

first-quarter sales and profit above expectations, while

Abercrombie & Fitch ( ANF ) advanced 12.8% on posting a strong

quarterly profit.

Goldman Sachs ( GS ) raised its 2026 year-end forecast for the S&P

500 to 8,000 from 7,600, citing continued strength in corporate

earnings.

Markets will next look toward the personal consumption

expenditures index data on Thursday. The Federal Reserve's key

inflation measure could provide fresh clues on the monetary

policy path forward under new chair Kevin Warsh.

Advancing issues outnumbered decliners by a 1.06-to-1 ratio

on the NYSE. There were 374 new highs and 84 new lows on the

NYSE.

On the Nasdaq, 2,279 stocks rose and 2,487 fell as declining

issues outnumbered advancers by a 1.09-to-1 ratio.

The S&P 500 posted 36 new 52-week highs and 7 new lows while

the Nasdaq Composite recorded 152 new highs and 65 new lows.