* Indexes: Dow up 0.35%, S&P 500 up 0.21%, Nasdaq flat

* U.S. equity funds record first weekly outflow in three

weeks

* SpaceX set to top $2 trln in market cap

* Space stocks dip ahead of debut after huge run-up this

quarter

* Adobe drops after exit of CFO Dan Durn

(Updates prices throughout, adds details on SpaceX shares)

By Johann M Cherian and Twesha Dikshit

June 12 (Reuters) - The benchmark S&P 500 see-sawed between

marginal gains and losses on Friday, ahead of the market debut

of Elon Musk's SpaceX, while hopes for an imminent Middle East

peace deal buoyed overall sentiment.

U.S. President Donald Trump's comments on Thursday suggested

that a deal to end the Middle East conflict and reopen the

crucial Strait of Hormuz could be signed as early as this

weekend. However, Tehran said that the final decision was

pending.

The spotlight is now on SpaceX, which is expected

to start trading on the Nasdaq for the first time later in the

day and is likely to be immediately ranked among the biggest

publicly listed U.S. companies.

The stock was indicated to open at $174, nearly 30% above

its IPO share price, putting its valuation around $2 trillion.

Only about 3% to 4% of SpaceX's shares are expected to

be available for trading, with a large allocation to retail

investors.

"What we've seen with many high-profile IPOs is an initial

surge in price followed by a period where investors give some of

those gains back," said Jay Woods, chief strategist at Freedom

Capital Markets.

"My concern is that retail investors who receive allocations

may not take profits soon enough and could get hurt if the stock

pulls back."

Shares of other space stocks, which have soared in the

lead-up to the debut, eased on Friday. Rocket Lab ( RKLB ) fell

8.2%, Intuitive Machines ( LUNR ) and Planet Labs shed

10% and 7.5%, respectively, while funds holding shares of SpaceX

such as Fundrise Innovation Fund rose 17.7%.

Nine of 11 major S&P 500 sectors moved higher, with

materials leading with a 1.6% rise.

Chip stocks were volatile, with Intel ( INTC ) last up 3.8%,

while Advanced Micro Devices ( AMD ) added 7% after Citigroup

raised its rating to "buy" from "neutral". Megacaps such as

Amazon.com ( AMZN ) fell 2% and Microsoft ( MSFT ) dropped 1.7%.

U.S. equity funds saw their first weekly outflow in three,

and earlier this week the technology index confirmed a

correction. Analysts believe some of the weakness in U.S. stocks

and bitcoin's 16% fall last week could be due to traders

trimming holdings ahead of SpaceX's debut.

At 10:26 a.m. ET, the Dow Jones Industrial Average

rose 175.90 points, or 0.35%, to 51,027.28, the S&P 500

gained 15.55 points, or 0.21%, to 7,409.88 and the Nasdaq

Composite gained 1.31 points, nearly flat, to 25,810.97.

Still, the three main U.S. stock indexes are set for a muted

end to the week, amid uncertainty surrounding the Iran conflict

and concerns that a rally in AI stocks has gone too far.

SpaceX, which also includes Starlink and xAI, has already

defied some Wall Street conventions. Index providers such as

Nasdaq and FTSE Russell have tweaked their entry requirements

for its inclusion, while the company also set its stock price at

$135, even before the roadshow began, reflecting Musk's sway

over the IPO.

Some analysts have, however, voiced caution over the

fundamentals of the company, which posted more than $4 billion

in annual losses last year.

On the macro front, a survey showed that consumer sentiment

fared better than expected this month, while data earlier this

week showed inflation pressures were mounting.

However, following Trump's remarks on Thursday, traders

pushed their expectations for an interest rate hike by the

Federal Reserve to December from October earlier this week, the

CME Group's FedWatch tool showed.

Adobe slid 8.3% after the exit of CFO Dan Durn.

Advancing issues outnumbered decliners by a 1.81-to-1 ratio

on the NYSE, and by a 1.46-to-1 ratio on the Nasdaq.

The S&P 500 posted 30 new 52-week highs and 10 new lows,

while the Nasdaq Composite recorded 141 new highs and 46 new

lows.