(Updates to mid-afternoon trading)

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Indexes up: Dow 1.23%, S&P 500 0.72%, Nasdaq 0.40%

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Alphabet up after report on talks with Meta to supply AI

chips

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Retail sales, producer prices, consumer confidence reports

released

By Stephen Culp

NEW YORK, Nov 25 (Reuters) - Wall Street advanced on

Tuesday as a spate of economic data appeared to support the case

for the U.S. Federal Reserve to implement its third and final

rate cut of the year in December, while softness in the tech

sector limited the Nasdaq's gains.

All three major U.S. stock indexes strengthened as the

session wore on, with the blue-chip Dow out front. But sagging

shares of artificial intelligence frontrunner Nvidia ( NVDA )

limited the Nasdaq's advance.

Nvidia ( NVDA ) dipped 3.9%, while the Philadelphia SE Semiconductor

index was last off 0.8%.

An influx of economic data was released, much of it stale

due to the recent protracted government shutdown, supporting

views that the Federal Open Market Committee will reduce its key

Fed funds target rate by 25 basis points at its upcoming

monetary policy meeting.

The Commerce and Labor departments issued September reports

on retail sales and producer prices, respectively, which showed

spending softened and that inflation continued to cool.

"Of course (the data) reflects September and we're in

November, but nevertheless the trend seems to be that inflation

is not worsening, and that opens the door to a December rate

cut," said Peter Cardillo, chief market economist at Spartan

Capital Securities in New York.

More recent data from the Conference Board showed a

worse-than-expected deterioration of consumer confidence, with

near-term expectations tumbling nearly 12%.

"Going into the holiday season, I don't think this bodes

well," Cardillo added. "(It's) another point that supports the

need to lower rates in December."

Financial markets agree, and are currently pricing in an

84.7% likelihood of that happening, compared with 50.1% a week

ago.

That probability has gained strength in recent days following

dovish remarks by New York Fed President John Williams and Fed

Governor Christopher Waller, among others.

The Dow Jones Industrial Average rose 569.39 points,

or 1.23%, to 47,017.66, the S&P 500 gained 48.51 points,

or 0.72%, to 6,753.63 and the Nasdaq Composite

gained 93.49 points, or 0.40%, to 22,964.28.

Among the 11 major sectors in the S&P 500, healthcare

led the gainers, while utilities suffered the

steepest percentage decline.

While softer-than-expected retail sales data and the dour

consumer confidence reading raised concerns over the health of

the consumer, who is responsible for about 70% of the U.S.

economy, a smattering of generally positive retail earnings

helped send the S&P 500 retail index up 2.2%.

Department store chain Kohl's jumped 34.6% and clothing

retailer Abercrombie & Fitch ( ANF ) surged 35.0%, after the

companies hiked their annual earnings forecasts.

But Burlington Stores ( BURL ) tumbled 11.5% after

third-quarter revenue missed estimates.

Alphabet's shares rose 1.3% after the

Information reported Meta Platforms was in discussions

to use Google's AI chips in its data centers from 2027 and rent

chips from Google Cloud by next year.

U.S.-listed shares of Alibaba slipped 2.1% even after

the Chinese e-commerce firm beat quarterly revenue expectations.

Cryptocurrency exchange shares Coinbase and

Strategy Inc ( MSTR ) slid 3.4% and 5.2%, respectively, in the

face of ongoing bitcoin weakness.

Advancing issues outnumbered decliners by a 3.73-to-1 ratio

on the NYSE. There were 144 new highs and 38 new lows on the

NYSE.

On the Nasdaq, 3,121 stocks rose and 1,462 fell as advancing

issues outnumbered decliners by a 2.13-to-1 ratio.

The S&P 500 posted 36 new 52-week highs and 2 new lows while

the Nasdaq Composite recorded 118 new highs and 69 new lows.