(Updates to US midday)

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Nvidia ( NVDA ) second-qtr results due after the closing bell

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Dollar recovers even as Fed independence worries linger

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U.S. stocks slightly higher in early trading

By Caroline Valetkevitch

NEW YORK, Aug 27 (Reuters) - Major stock indexes edged

higher on Wednesday, with upcoming results from artificial

intelligence leader Nvidia ( NVDA ) offsetting concerns about

the Federal Reserve's independence, and the dollar recovered

from previous session's drop.

A lawyer for Fed Governor Lisa Cook said she would file a

lawsuit against U.S. President Donald Trump after he said he

would fire her. Trump's statement left some investors worried

about the independence of the U.S. central bank.

Interest-rate sensitive two-year yields fell to an almost

four-month low and the yield curve steepened as traders weighed

the chance that Trump may be able to make more dovish

appointments to the Fed.

Even so, the dollar rebounded from its drop in the previous

session and was last up 0.36% at 147.93 Japanese yen,

while the euro was down 0.48% at $1.1586.

The three major U.S. stock indexes were slightly higher,

with Nvidia's ( NVDA ) second-quarter report, due after the closing bell,

seen as a test of the AI optimism that has propelled markets

over the past couple of years.

"Trump has been on the Fed's back since Day One, and this

(Cook firing) is just a continuation of that strategy. The

market is completely focused, 100%, on Nvidia ( NVDA )," said Jake

Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

Investors are wondering whether Nvidia's ( NVDA ) results will

continue to live up to Wall Street's high expectations, he said.

"My expectation is today it will."

Technology shares, including several AI leaders, have

wobbled this month with investors pointing to some signs of

caution emerging in the sector.

The Dow Jones Industrial Average rose 93.12 points,

or 0.20%, to 45,509.88. The S&P 500 climbed 10.61 points,

or 0.16%, to 6,476.31 and the Nasdaq Composite advanced

33.25 points, or 0.15%, to 21,580.05.

European stocks rebounded slightly from the previous day's

decline, with investors monitoring political risks in France.

Concerns over a potential collapse of French Prime Minister

Francois Bayrou's government next month sparked a selloff in

French assets on Tuesday.

MSCI's gauge of stocks across the globe rose

0.49 points, or 0.05%, to 953.21.

The pan-European STOXX 600 index was up 0.09%.

Market watchers interpreted Fed Chair Jerome Powell's

comments at the Fed's annual Jackson Hole symposium last week as

indicating interest rate cuts could be on the way. Fed funds

futures traders are pricing in 88% odds of a cut in September,

according to the CME Group's FedWatch Tool.

But the outlook for U.S. interest rates is still likely to

depend on labor market strength and inflation trends.

The two-year U.S. Treasury yield, which typically

moves in step with interest rate expectations, was last at

3.654%, down around two basis points on the day. The benchmark

10-year note yield rose to 4.289% from 4.256%.

The yield curve between two-year and 10-year notes

was last at 63.3 basis points, the steepest since

April 22.

U.S. crude rose 0.79% to $63.74 a barrel and Brent

rose to $67.64 per barrel, up 0.62% on the day.