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Consumer prices rise less than expected in April; core CPI

slows

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Retail sales flat in April

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Indexes up: Dow 0.53%, S&P 0.58%, Nasdaq 0.59%

(Updated at 09:42 a.m. ET/ 1342 GMT)

By Bansari Mayur Kamdar and Shristi Achar A

May 15 (Reuters) - The benchmark S&P 500 and

Nasdaq hit record highs in early trade on Wednesday

after a lower-than-expected increase in a key inflation metric

bolstered hopes of interest rate cuts from the Federal Reserve

this year.

The blue-chip Dow was set to breach the 40,000-mark

for the first time and the other two major indexes surpassed

all-time peaks hit in March, after the lukewarm U.S. consumer

prices data for April led traders to slightly raise bets that

the Fed will cut its policy rate in September and again in

December.

"What the data does for the Fed is it establishes the first

in what they are going to need to be a series of softer CPI

reports for them to be able to cut later this year," said Jason

Pride, chief of investment strategy and research at Glenmede.

"If there were concerns that they weren't going to cut at

all, this just alleviated some of those concerns."

Separately, U.S. retail sales came in unexpectedly flat in

April as higher gasoline prices pulled spending away from other

goods, indicating that consumer spending was losing momentum.

At 09:42 a.m. ET, the Dow Jones Industrial Average

rose 210.56 points, or 0.53%, to 39,768.67, the S&P 500

gained 30.39 points, or 0.58%, to 5,276.98 and the Nasdaq

Composite gained 96.94 points, or 0.59%, to 16,608.12.

Equities built on gains made on Tuesday, when Fed Chair

Jerome Powell's assessment of U.S. growth and inflation

reassured investors as they digested hotter-than-expected

producer prices for April.

Stocks have rallied so far this year on better-than-expected

earnings for the first quarter and expectations that the Fed

will be able to cool inflation without badly hurting growth and

eventually transition to cutting interest rates.

Rate-sensitive real estate stocks outpaced other

sectoral indexes with a 1.7% gain.

Most megacap growth and technology stocks also rose in early

trading, with Nvidia ( NVDA ) leading gains.

Retail investor darling GameStop ( GME ) fell 21%, set to

snap this week's rally that was driven by "Roaring Kitty" Keith

Gill, a central figure behind the 2021 meme stock frenzy,

posting on social media platform X.

Other meme stocks AMC Entertainment ( AMC ) and Koss Corp ( KOSS )

dropped 17.3% and 20.9%, respectively.

Advancing issues outnumbered decliners by a 3.96-to-1 ratio

on the NYSE and by a 2.81-to-1 ratio on the Nasdaq.

The S&P 500 posted 43 new 52-week highs and no new lows

while the Nasdaq recorded 153 new highs and 25 new lows.

(Reporting by Bansari Mayur Kamdar and Shristi Achar A in

Bengaluru; Additional reporting by Ankika Biswas; Editing by

Sriraj Kalluvila and Devika Syamnath)