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Indexes extend gains from end of last week

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Paramount Global ( PARAA ) up as bidders await word from special

committee

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Tyson Foods ( TSN ) shares sink on worries over consumer demand

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Spirit Airlines ( SAVE ) tumbles on weak revenue outlook

(Updates to market close)

By David French

May 6 (Reuters) - U.S. stock indexes ended higher on

Monday, their third straight session of advances, as investors

continued to gain hope that there was a greater chance of the

Federal Reserve cutting interest rates this year.

Expectations for rate cuts by the U.S. central bank have

been tempered as the year has progressed, as inflation has

proven stickier, and some investors had begun to worry they

might not materialize at all, sending markets lower in April.

However, data on Friday showed U.S. job growth slowed more

than expected in April, taking pressure off the U.S. central

bank to keep rates higher for longer. Coupled with earnings

season in corporate America surprising to the upside, this gave

equity investors renewed positive moment in recent sessions.

After the Fed last week signaled it was leaning towards

eventual reductions in borrowing costs, but wanted to gain

"greater confidence" that inflation will continue to fall before

cutting rates, policymakers reiterated that message on Monday.

Richmond Fed President Thomas Barkin said the current

interest rate level should cool the economy enough to return

inflation to the central bank's 2% target, with the strength of

the job market giving officials time to wait.

Barkin, a voter this year on interest rate policy, added

that inflation "data whiplash" supported the Fed's deliberative

policy towards interest rates.

Meanwhile, Federal Reserve Bank of New York President John

Williams said while rate cuts would happen, monetary policy was

currently in a very good place.

"The primary thing that the market is trying to reason its

way through is inflation and the Federal Reserve," said Jason

Pride, chief of investment strategy & research at Glenmede.

"A lot of the market's movements have been a reflection

of the market really trying to figure out and fine tune the

different perspectives on inflation and rates."

Traders are currently pricing in rate cuts worth 46 basis

points from the Fed by the end of 2024, with the first cut

expected in September or November, according to LSEG's rate

probability app.

According to preliminary data, the S&P 500

gained 52.91 points, or 1.03%, to end at 5,180.70 points,

while the Nasdaq Composite gained 191.55 points, or

1.19%, to 16,347.88. The Dow Jones Industrial Average

rose 175.34 points, or 0.45%, to 38,851.02.

The majority of S&P 500 sectors ended in positive territory.

The energy index was among the leading gainers, rising

in part due to U.S. natural gas futures hitting their

highest level in 14 weeks.

With the earnings season in full swing, investors will also

keep an eye on quarterly numbers from major firms, including

Walt Disney ( DIS ) and Uber ( UBER ) this week.

Of the 397 firms in the S&P 500 that have reported earnings

through Friday, 76.8% beat analysts' profit estimates, compared

with the long-term average of 66.7%, as per LSEG data.

Arm Holdings is another with earnings on deck this

week. It was up on Monday, as chipmakers broadly gained.

Micron Technology ( MU ) increased after a report said Baird

upgraded the stock, and Advanced Micro Devices ( AMD ) and Super

Micro Computer ( SMCI ) were higher - recovering ground lost

after disappointing earnings from the pair last week.

Paramount Global ( PARAA ) advanced after the media company

ended its exclusive negotiations with Skydance Media without a

deal, allowing the special committee to entertain other offers

from rival bidders.

Tyson Foods ( TSN ) fell after the meatpacker surpassed Wall

Street expectations for second-quarter profit but warned that

consumers were under pressure from persistent inflation.

Meanwhile, Spirit Airlines ( SAVE ) slumped after reporting

a weak revenue outlook for the second quarter.