(Updates with afternoon prices, analyst quote in paragraph 7-8)

* Indexes up: Dow 0.62%, S&P 500 0.24%, Nasdaq 0.23%

* Gap plunges after slashing sales forecast

* S&P 500 tech index at all-time highs

* All three indexes on track to end week and month higher

By Twesha Dikshit, Utkarsh Hathi and Saeed Azhar

May 29 (Reuters) - Wall Street's main indexes extended

their record run on Friday and were headed for weekly and

monthly gains as Dell results drove tech shares higher, while

investors awaited details on a potential U.S.-Iran deal.

President Donald Trump said in a social media post that he would

make a final decision on the deal on Friday. Tehran earlier said

it was looking for action, not words, when it came to an

agreement.

Dell surged 28% after raising its full-year profit

and revenue forecasts on Thursday. The tech sector

climbed 1.83%, led by gains in chip stocks.

Peers Hewlett Packard Enterprise ( HPE ) rose 12% and Super

Micro Computer ( SMCI ) gained 10%. Among megacaps, Microsoft ( MSFT )

rose 3%.

All three indexes hit intraday record highs, cruising on

renewed optimism around AI and strong earnings growth, despite

concerns about the Iran war's impact on inflation and the global

economy.

At 2:29 p.m. ET (1829 GMT), the Dow Jones Industrial

Average rose 316.39 points, or 0.62%, to 50,985.36, the

S&P 500 gained 18.01 points, or 0.24%, to 7,581.64 and

the Nasdaq Composite gained 61.30 points, or 0.23%, to

26,978.77.

EARNINGS-DRIVEN RALLY

"There's definitely euphoric sentiment in the market around

AI. The rally has really been driven by earnings," said Ohsung

Kwon, chief equity strategist at Wells Fargo.

He suggested investors buy and hold AI stocks, then make

extra income by selling call options at prices much higher than

the current stock price.

Melissa Brown, head of investment decision research at

SimCorp, said over the past few weeks volume has gone up, which

suggests more people are coming into the market.

The S&P 500 was on track for a ninth consecutive weekly

gain, its longest winning streak since December 2023.

The S&P 500 communications services sector fell 1.7%,

as Alphabet dropped 1.8%.

Consumer staples shares were weak with heavyweights Costco

and Walmart ( WMT ) down 4.5% and 2.8%, respectively.

The S&P automaker index dropped 0.8% after

reports the Trump administration wants North American-built

vehicles to have 82% regional content to qualify for

preferential treatment under the U.S.-Mexico-Canada Agreement.

General Motors ( GM ) and U.S.-listed shares of Stellantis

were down about 1% and 2.7%, respectively.

The software services index advanced 5%, erasing

all losses since the end of January, when concerns over AI

disruption had weighed on the sector.

The small-cap Russell 2000 index was down 0.6%.

U.S. economic data on Thursday showed inflation increased at its

fastest pace in three years in April, while GDP for the first

quarter was revised lower to a 1.6% annual rise.

The Fed's Kansas City President Jeffrey Schmid warned that the

energy shock may not be temporary; Vice Chair for Supervision

Michelle Bowman said a persistent rise in inflation might

require tighter monetary policy.

Money markets expect the Federal Reserve to keep interest

rates steady for the rest of the year, with expectations of a

25-basis-point hike in December.

Among other movers, Gap shares tumbled 17.5% after the

apparel retailer cut its annual sales forecast, while American

Eagle Outfitters ( AEO ) dropped 12.7% after keeping its annual

comparable sales forecast unchanged.

Advancing issues outnumbered decliners by a 1.1-to-1 ratio

on the NYSE. There were 440 new highs and 95 new lows on the

NYSE.

On the Nasdaq, 2,505 stocks rose and 2,293 fell as advancing

issues outnumbered decliners by a 1.09-to-1 ratio.

The S&P 500 posted 26 new 52-week highs and eight new lows,

while the Nasdaq Composite recorded 113 new highs and 44 new

lows.