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Alphabet slips as OpenAI to launch search competitor

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Arm Holdings up on report of AI chips plan

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Indexes up: S&P 500 0.06%, Nasdaq 0.08%, Dow 0.17%

(Updated at 09:40 a.m. ET/ 1340 GMT)

By Sruthi Shankar and Shristi Achar A

May 13 (Reuters) - U.S. stock indexes edged higher on

Monday, nearing record peaks following a recent run of gains,

with investors awaiting key inflation figures this week to gauge

the likelihood of interest rate cuts in 2024.

The indexes were back near all-time highs hit in March,

boosted by stronger-than-expected earnings reports and signs of

a cooling labor market that have fueled bets of one or two rate

cuts by the U.S. Federal Reserve this year.

"Not only is earnings coming better than anticipated, but

the outlook has been raised," said Thomas Hayes, chairman at

Great Hill Capital LLC.

"Market likes that but also needs to get some level of

comfort that inflation is not going back up and potentially

going down to give the Fed cover for at least one or maybe two

cuts before the end of the year."

The keenly awaited inflation data on Wednesday is expected

to show that core consumer prices rose 0.3% on a

month-over-month basis in April, for an annual rise of 3.6%,

according to economist forecasts in a Reuters poll.

Investors will also focus on a spate of other economic

readings this week, including monthly producer prices, retail

sales and weekly jobless claims.

While Fed policymakers have reassured markets the next

policy move is not a rate rise, the timing of the first cut

remains uncertain. On Monday, Fed Vice Chair Phillip Jefferson

said he supports holding steady on interest rates until it's

clear that price pressures are moderating.

Traders are currently pricing in rate cuts of 44 bps from

the Fed by the end of 2024, according to LSEG's rate

probabilities app, with odds for a September cut of at least 25

bps at 66%.

Major companies reporting this week include Home Depot ( HD )

, Walmart ( WMT ), Cisco ( CSCO ) and Alibaba.

Of the 459 S&P 500 companies that reported through Friday,

77.3% beat analysts' profit estimates, according to LSEG data.

The long-term average is 66.7%.

Monday's gains follow the indexes registering a

multi-week win streak on Friday.

At 09:40 a.m. ET, the Dow Jones Industrial Average

rose 68.08 points, or 0.17%, to 39,580.92, the S&P 500

gained 3.32 points, or 0.06%, to 5,226.28 and the Nasdaq

Composite gained 13.76 points, or 0.08%, to 16,354.63.

Alphabet slipped 2.2% as Microsoft-backed OpenAI

looked set to announce its artificial intelligence (AI)-powered

search product on Monday.

The Google parent's drop pulled down communication services

stocks by 1.3%, lagging other S&P 500 sectors.

Apple ( AAPL ) added 1% after a report on Friday said the

company had closed in on an agreement with ChatGPT-maker OpenAI

to use the startup's technology on the iPhone.

Arm Holdings climbed 5% after Nikkei Asia

reported the SoftBank Group-backed chip designer plans

to develop AI chips, seeking to launch the first products in

2025.

Advancing issues outnumbered decliners by a 3.86-to-1 ratio

on the NYSE and by a 2.75-to-1 ratio on the Nasdaq.

The S&P 500 posted 22 new 52-week highs and no new lows

while the Nasdaq recorded 84 new highs and 25 new lows.