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Kellanova ( K ) jumps after Mars to buy co in $36 bln deal

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U.S. CPI rises as expected in July

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Alphabet dips after report US mulls Google break-up

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Indexes: Dow up 0.64%, S&P 500 up 0.22%, Nasdaq down 0.24%

(Updated to 2:00 p.m. ET/1800 GMT)

By Shashwat Chauhan and David French

Aug 14 (Reuters) -

Wall Street's main indexes offered a mixed bag on Wednesday,

as Alphabet and some megacap tech stocks traded lower but the

latest inflation data reassured investors betting the Federal

Reserve would start cutting U.S. interest rates next month.

Moves were generally subdued though, with many investors

away on a mid-August afternoon, and new triggers for trading

were absent, contributing to an overall listless picture among

the benchmarks.

The Google-parent dropped 3.2% after a media

report said the U.S. Department of Justice is considering

options that include breaking up the online search engine.

Losses in Alphabet weighed on the Nasdaq and pulled the

communication services sector down 1.3%, the most

among the 11 major S&P 500 sectors.

Other megacaps were mixed: Tesla slumped 3.5%

and Meta Platforms ( META ) was 0.4% lower. Microsoft ( MSFT ) was up

0.6% and Nvidia ( NVDA ) rose 0.7%.

At 2:00 p.m. EDT, the S&P 500 gained 11.88

points, or 0.22%, to 5,446.31 points, while the Nasdaq Composite

lost 40.67 points, or 0.24%, to 17,146.73. The Dow Jones

Industrial Average rose 257.24 points, or 0.64%, to

40,022.88.

The S&P 500 and the Nasdaq had posted four

straight session of gains following softer-than-expected

producer prices data that indicated inflation continued to

moderate, although not yet all the way to the U.S. central

bank's 2% target.

A rebound in megacap and tech stocks has helped markets

recoup most losses from a global market rout early this month

after data showed the U.S. unemployment rate surged in July.

Data on Wednesday showed U.S. consumer prices rose

moderately in July, and the annual increase in inflation slowed

to below 3% for the first time since early 2021, supporting the

view inflation was being tamed.

"There is nothing in here that should prevent the Fed from

proceeding with a rate cut in September," said David Doyle, head

of economics at Macquarie.

"The pace of magnitude of easing will depend broadly on

incoming data with inflation and employment figures taking on

particular importance."

Money markets now see a 55% chance of a 25-basis point (bps)

rate cut at the Fed's Sept. 17-18 meeting, as per the CME

FedWatch Tool. Before the data, traders were nearly evenly split

between a 25-bps and 50-bps cut.

The Cboe volatility index, Wall Street's fear gauge,

stayed below its long term average of 20 points for the second

day at 16.6 after hitting its highest since 2020 just last week.

A majority of the major S&P sectors were in positive

territory, led by a 1.2% rise in financials. Its advance

was aided by gains of more than 4.6% by Progressive and

Charles Schwab ( SCHW ), which rose after positive July

performance numbers, and Allstate ( ALL ), which climbed after

agreeing to sell a business unit.

Both of the insurers were on course to post record

closing highs.

Kellanova ( K ) surged 7.7% after family-owned candy giant

Mars said it would buy the Cheez-It and Pringles maker in a

nearly $36 billion deal.

Cardinal Health ( CAH ) gained 4.3% after the drug

distributor raised its 2025 profit forecast.

TurboTax parent Intuit slipped 1.6% after Morgan

Stanley downgraded its rating to "equal-weight" from

"overweight".