* Indexes up: Dow 1.31%, S&P 500 1.08%, Nasdaq 1.55%

* Target ( TGT ) slides after warning of tough macro environment

* Chip sector rallies in regular session; Nvidia ( NVDA ) dips in

after-hours trade

* Travel stocks rally as oil prices fall

(Updates with final closing prices, adds volume)

By Sinéad Carew and Utkarsh Hathi

May 20 (Reuters) - Wall Street's main indexes rallied

more than 1% on Wednesday, bouncing back from a three-day

selloff with a boost in sentiment from technology and chip

stocks, which rose ahead of Nvidia's ( NVDA ) quarterly results.

The report from Nvidia ( NVDA ) - the leading artificial

intelligence chipmaker and the world's most highly valued

company - is viewed as a window into whether the appetite for

spending on AI remains strong enough to support lofty valuations

across the technology sector.

Nvidia ( NVDA ) shares closed up 1.3%, but after-hours trading was

volatile after the company forecast second-quarter revenue above

Wall Street expectations and announced an $80 billion share

buyback program.

Before the Nvidia ( NVDA ) report, the Philadelphia SE Semiconductor

index had rallied 4.5% with big gainers including Astera

Labs ( ALAB ), up 17.7%, and ARM Holdings U.S. traded shares

, up 15%.

"Technology is driving the bus again today, and the AI

theme. We've swapped back from yesterday's concerns about rising

rates and potential inflation and are leaning more into the

all-things-AI story," said Carol Schleif, chief market

strategist at BMO Private Wealth in Minneapolis. "It's actually

a little bit unusual because you would expect the market to sit

pretty quiet waiting for Nvidia's ( NVDA ) results later today. But

there's clearly a lot of optimism."

The Dow Jones Industrial Average rose 645.47 points,

or 1.31%, to 50,009.35, the S&P 500 gained 79.36 points,

or 1.08%, to 7,432.97 and the Nasdaq Composite

gained 399.65 points, or 1.55%, to 26,270.36.

The lack of a resolution to the U.S.-Israel war on Iran had

sent U.S. indexes lower in the last three days as investors

worried that elevated oil prices would boost inflation enough to

lead the Federal Reserve to raise interest rates.

On Wednesday, Iran's foreign ministry spokesperson said the

exchange of messages between Iran and the U.S. has

continued. President Donald Trump said the U.S. was willing to

wait a few days for the "right answer" from Iran. Earlier Trump

had said negotiations with Iran were in the final stages.

While investors are still monitoring fluctuating energy

prices and inflation, Schleif said "they really want to look

beyond what's going on in the Middle East" and focus on the

potential of AI.

Also supporting stocks was an easing in the benchmark

10-year Treasury yield on Wednesday after it rose for three

straight days, touching a 16-month high.

Stocks gradually added to gains following the release of

minutes from the Federal Reserve's last meeting, which showed

more officials saying the central bank should lay the groundwork

for a possible rate hike. Bets for a Fed rate hike in December

were choppy after the meeting and recently showing a 36.8%

probability, down from 42% on Tuesday, according to the latest

data from CME Group's FedWatch tool.

Citing uncertainty around issues such as oil prices, tariffs

and AI, Brian Jacobsen, chief economic strategist at Annex

Wealth Management, said after the minutes that "it's hard to

take any of their forward guidance as more than just mere

guesswork."

Among the 11 major S&P 500 sectors, eight advanced on

Wednesday with the biggest gains in consumer discretionary

, up 2.5%. The second-biggest gainer was technology

, which rallied 2.5%. On the flip side, energy

dropped 2.6%.

Consumer staples slipped almost 1% with pressure

from Target ( TGT ). Shares in the retailer sank 3.9% after it

warned of a challenging macroeconomic backdrop even as it

doubled its annual sales growth forecast. In sympathy, shares

fell 2.5% in retail bellwether Walmart ( WMT ), which is due to

report results on Thursday.

Falling oil prices boosted sentiment around airline stocks

with Delta Air Lines ( DAL ), United Airlines, Southwest

Airlines ( LUV ) and Alaska Air ( ALK ) advancing between 6% and

10%.

Cruise companies Carnival Corp ( CCL ) and Norwegian Cruise

Line Holdings ( NCLH ) led the discretionary sector's percentage

gains with both adding more than 8%.

Intuit shares declined 3.9% after Reuters, citing

an internal memo, reported that the company is laying off about

3,000 employees.

Advancing issues outnumbered decliners by a 3.39-to-1 ratio

on the NYSE, where there were 220 new highs and 119 new lows. On

the Nasdaq, 3,711 stocks rose and 1,144 fell as advancing issues

outnumbered decliners by a 3.24-to-1 ratio. The S&P 500

posted 19 new 52-week highs and 15 new lows.

On U.S. exchanges 18.73 billion shares changed hands

compared with the 18.55 billion moving average for the last 20

sessions.