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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

(Updates to 4:00 p.m. EDT)

By Echo Wang

June 18 (Reuters) -

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

Nvidia ( NVDA ) extended its surge to new peaks, while the Dow was barely

changed in 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.

Other chip stocks, including Qualcomm ( QCOM ), Arm Holdings

and Micron, also extended their recent rallies,

boosting the Philadelphia SE Semiconductor index to 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,

with gains in many chip stocks despite 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.

Technology was the top S&P 500 sector gainer,

while communication services led declines.

Investors focused on Fed officials' comments on Tuesday. New

York Fed President John Williams said rates will come down

gradually over time, 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.

According to preliminary data, the S&P 500

gained 14.23 points, or 0.25%, to end at 5,487.46 points,

while the Nasdaq Composite gained 9.09 points, or 0.05%,

to 17,862.23. The Dow Jones Industrial Average rose 54.07

points, or 0.15%, to 38,832.17.

Shares of education technology provider Chegg ( CHGG ) rose

after announcing job cuts in a restructuring.

Homebuilder Lennar ( LEN ) fell after forecasting

lower-than-expected third-quarter home deliveries.