(Updates to 10:58 a.m. EDT)

By Stephen Culp

NEW YORK, May 24 (Reuters) - Wall Street rebounded and

Treasury yields paused in the wake of upbeat economic data on

Friday as investors positioned themselves ahead of the long U.S.

Memorial Day weekend and the unofficial start to summer.

The U.S. stock market's bounce-back caps a week in which

minutes from the most recent Federal Reserve policy meeting

struck a more hawkish-than-expected tone, economic data hinted

at the possibility of rising inflation and megacap chipmaker

Nvidia's ( NVDA ) beat-and-raise earnings report re-ignited

investors' AI fervor.

The tech-heavy Nasdaq led all three major U.S. stock indexes

higher in a broad-based rally; 10 of the 11 major sectors in the

S&P 500 were green.

"We're seeing a bit of a relief rally from yesterday's sharp

decline," said Peter Cardillo, chief market economist at Spartan

Capital Securities in New York. "It's Friday ahead of a long

weekend and most of the market action will be in the early part

of the session."

On a weekly basis, the S&P 500 and the Dow were on track to

snap their streak of consecutive Friday-to-Friday gains, while

the tech-laden Nasdaq appeared set to notch a nominal gain for

the week.

Investors are growing increasingly resigned to the

higher-for-longer interest rate narrative in the wake of the Fed

minutes release on Wednesday, as well as cautious remarks from

various policy makers which expressed doubt as to whether

inflation is indeed on a reliable downward trajectory.

Financial markets are now pricing just one rate cut this

year, a far cry from the six cuts that were projected earlier in

the year.

On the economic front, new orders for U.S. durable goods

increased more than expected, while the University of Michigan's

final take on May consumer sentiment bumped higher, while near-

and long-term inflation expectations cooled down.

"The economy is still growing and earnings have been good,"

Cardillo added. "Those are the basic fundamentals of the stock

market."

The Dow Jones Industrial Average rose 49.56 points,

or 0.13%, to 39,114.82, the S&P 500 gained 30.41 points,

or 0.58%, to 5,298.25 and the Nasdaq Composite added

143.36 points, or 0.86%, to 16,879.40.

European shares extended their sell-off as investor

sentiment was dampened by interest rate worries, setting course

for a weekly decline.

The pan-European STOXX 600 index lost 0.24% and

MSCI's gauge of stocks across the globe gained

0.26%.

Emerging market stocks lost 0.66%. MSCI's broadest index of

Asia-Pacific shares outside Japan closed 0.86%

lower, while Japan's Nikkei lost 1.17%.

Treasury yields pared earlier gains in the

stronger-than-expected economic data.

Benchmark 10-year notes last fell 1/32 in price

to yield 4.4787%, from 4.475% late on Thursday.

The 30-year bond last fell 3/32 in price to

yield 4.5844%, from 4.58% late on Thursday.

The dollar dipped against a basket of world currencies but

remained on track for a weekly gain as stronger-than-expected

economic data has left markets on edge about the outlook for

interest rate cuts.

The dollar index fell 0.35%, with the euro up

0.28% to $1.0843.

The Japanese yen weakened 0.03% versus the greenback at

156.99 per dollar, while Sterling was last trading at

$1.2735, up 0.30% on the day.

Crude prices edged higher, after having been under pressure

for much of the week as the notion of prolonged restrictive Fed

policy dampened the demand outlook.

U.S. crude rose 0.79% to $77.48 per barrel and Brent

was last at $81.72, up 0.44% on the day.

Gold prices rose but appeared set for their first weekly

fall in three due to lowered rate cut expectations.

Spot gold added 0.3% to $2,336.32 an ounce.