* Indexes up: Dow 0.15%, S&P 500 0.71%, Nasdaq 1.12%

* Russel 2000 hits intraday record, last up 1.7%

* Eli Lilly rises after agreeing to buy three vaccine

developers

* Space stocks jump ahead of SpaceX's IPO

(Updates after market open)

By Twesha Dikshit and Utkarsh Hathi

May 26 (Reuters) - Wall Street's main indexes traded

near record highs on Tuesday, with AI-fueled optimism offsetting

concerns over Middle East peace talks after recent U.S. strikes

on Iran.

U.S. Secretary of State Marco Rubio said that the deal with

Tehran could "take a few days," while Iran's Tasnim news agency

reported that Tehran was seeking the release of $24 billion of

Iranian funds frozen overseas.

"It's cautious optimism in markets today with a singular

focus on planning an off-ramp for this war, but with an

understanding that it will take a while for energy prices and

inflation (to) come back to earth," said Art Hogan, chief market

strategist at B Riley Wealth.

Brent crude oil rose as much as 2.7% but remained below $100

a barrel, while global stocks wavered as uncertainty lingered

over whether a deal would be reached to open up shipping flows

through the Strait of Hormuz.

Semiconductor stocks, which have surged on AI-driven demand,

led gains. Micron jumped 13.3% and Marvell Technology ( MRVL )

rose 7.4%, while Intel ( INTC ) and Qualcomm ( QCOM )

added 1.6% each. The Philadelphia SE Semiconductor index

rose 4.1% to an all-time high.

At 10:02 a.m. ET, the Dow Jones Industrial Average

rose 73.76 points, or 0.15%, to 50,653.46, the S&P 500

gained 53.34 points, or 0.71%, to 7,526.81 and the Nasdaq

Composite gained 295.88 points, or 1.12%, to 26,639.85.

The S&P 500 and the Russel 2000 both touched

intraday record highs on Tuesday, underscoring the strength of

the recent rally.

Eight of the 11 main S&P sectors were in the green, with the

S&P 500 information technology subindex leading gains

with a rise of 1.5%.

Upbeat earnings and renewed confidence in AI trade have

driven U.S. equities higher despite the ongoing conflict with

Iran, with investors now turning their attention to IPOs of some

of the largest private AI companies, including SpaceX.

Shares of space companies jumped, with Intuitive Machines

gaining 16%, while Planet Labs and Rocket Lab were up 13.5% and

5%, respectively.

With the earnings season nearly over, first-quarter earnings

growth is expected to be 29% year-on-year compared with the

16.1% estimated a month ago, according to LSEG data from

Friday.

Kevin Warsh was sworn in as chair of the Federal Reserve on

Friday. His appointment comes amid growing concerns about

inflation, driven by higher oil prices, which have added to

expectations of tighter global monetary policy.

Markets currently expect the Fed to keep rates on hold for

the rest of the year, with a 25 bps rate hike seen in December.

Advancing issues outnumbered decliners by a 3.13-to-1 ratio

on the NYSE, and by a 2.27-to-1 ratio on the Nasdaq.

The S&P 500 posted 30 new 52-week highs and one new low

while the Nasdaq Composite recorded 128 new highs and 42 new

lows.

(Reporting by Twesha Dikshit and Utkarsh Hathi in Bengaluru;

Editing by Shinjini Ganguli)