(Updates to market close)

* S&P 500 breaks back above 100-day, 200-day moving

averages

* PCE, GDP data show inline inflation,

weaker-than-expected growth

* Amazon ( AMZN ) shares rise after CEO reveals AI services

revenue

* Constellation Brands ( STZ ) jumps after smaller drop in Q4

sales

By Stephen Culp and Avinash P

NEW YORK, April 9 (Reuters) - U.S. stocks advanced on

Thursday, as ongoing negotiations toward a peaceful resolution

to the six-week Middle East conflict helped ease worries over

the fragile U.S.-Iran truce.

All three major U.S. stock indexes gained ground after

rebounding from an earlier dip as Israel sought talks with

Lebanon.

"There's an increasing recognition that this administration

is more bark than bite, and willing to make grand statements

about world destruction," said Oliver Pursche, senior vice

president at Wealthspire Advisors, in New York. "From an

investor's perspective, you have to decide whether to ignore it

all or just cash in and sit it out the next two years."

In two sessions, the S&P 500 has moved back above its

100-day and 200-day moving averages, two key technical levels.

Crude prices seesawed throughout the session as

markets waited for Iran to reopen the Strait of Hormuz, through

which one-fifth of the world's oil is shipped. Front-month WTI

futures settled up 3.66%, but remained below $100 per barrel.

The CBOE Market Volatility Index, called the "fear

index," dipped to its lowest point since the onset of the war.

The Commerce Department issued its GDP and PCE reports, which

showed the economy grew at a slower-than-expected pace in the

fourth quarter, while consumer prices remain elevated.

Minutes from the U.S. Federal Reserve's most recent monetary

meeting showed policymakers are increasingly eyeing potential

interest rate hikes to counter the inflationary impact of a

prolonged Iran war.

According to preliminary data, the S&P 500 gained

41.13 points, or 0.61%, to end at 6,823.94 points, while the

Nasdaq Composite gained 187.42 points, or 0.81%, to

22,819.30. The Dow Jones Industrial Average rose 273.73

points, or 0.57%, to 48,183.65.

Consumer discretionary stocks got a boost after Amazon.com's ( AMZN )

CEO Andy Jassy said artificial intelligence services at

its cloud-computing unit are generating annualized revenue of

more than $15 billion. Amazon's ( AMZN ) shares closed sharply higher.

"There's a lot of people out there that are questioning the

potential positive impact of AI and I think Amazon ( AMZN ) has shown

that that positive return can happen a lot more quickly than

most expected," Pursche added.

Software stocks were clear underperformers on the

day, while retail and chips outperformed.

Constellation Brands ( STZ ) jumped after the company posted a

smaller-than-expected drop in fourth-quarter sales.

Applied Digital ( APLD ) shares dropped after the data center

operator's third-quarter net loss widened from a year earlier.