US STOCKS-Wall St climbs as cooling inflation tempers Fed rate-hike concerns

By Shashwat Chauhan and Tharuniyaa Lakshmi

Sept 30 (Reuters) - Wall Street's main indexes gained on Wednesday, as a softer-than-anticipated inflation reading buoyed hopes that the Federal Reserve might not hike rates as soon as next month.

A Commerce Department report showed the Personal Consumption Expenditures (PCE) price index stood at 3.4% on an annual basis in August against estimates of 3.7%, per economists polled by Reuters.

Separately, second-quarter GDP data showed that the US economy grew at a solid clip, driven by robust consumer spending and business investment related to the buildout of AI infrastructure.

"The market had been tracing out a bullish formation, meaning the price pattern suggested that any positive catalyst could trigger a move higher and that's exactly what happened," said Sam Stovall, chief investment strategist at CFRA Research.

Traders now see a roughly 35% chance of an October rate hike, down from about a 45% chance seen before the data, according to data compiled by LSEG.

Comments from at least four Fed officials, including Minneapolis Fed President Neel Kashkari, are due later in the day.

Most megacap and growth stocks ticked higher in early trading, with Amazon.com AMZN.O and Apple AAPL.O up slightly, while Alphabet GOOGL.O advanced 2.1%.

At 09:55 a.m. ET, the Dow Jones Industrial Average .DJI rose 50.58 points, or 0.10%, to 51,400.50, the S&P 500 .SPX gained 33.17 points, or 0.43%, to 7,704.01 and the Nasdaq Composite .IXIC gained 193.57 points, or 0.72%, to 26,991.11.

Five of the 11 S&P 500 sectors were trading higher, with information technology .SPLRCT and energy .SPNY leading gains.

Real estate .SPLRCR and financials .SPSY were the laggards.

CHOPPY SEPTEMBER COMING TO A CLOSE

Despite weakness in September, driven by bond market volatility and elevated oil prices amid the US-Iran conflict, the benchmark S&P 500 .SPX and the Nasdaq .IXIC were on pace for a second straight quarterly advance, if gains hold.

The price-weighted Dow .DJI differed, with the index of 30 blue-chip US companies set for a quarterly fall and on track for its first monthly decline since March.

On Wednesday, the yield on the 10-year Treasury bond held steady at 5.246%, a day after hitting its highest since June 2007. Crude oil prices rose on the day, with the December contract for Brent crude futures moving higher.

Warnings from leaders of the biggest AI companies earlier this month about the potential existential risks from the technology had also rattled the AI trade, which has been the dominant factor behind Wall Street's rise to record highs this year.

The next test of the AI trade could be memory-chip giant Micron Technology's MU.O earnings due after the bell.

Among other movers, Boeing BA.N rose 0.2% after the Pentagon said the plane maker has been selected to build the US Navy's next-generation stealth fighter.

Boeing beat out rival Northrop Grumman NOC.N for the development contract, worth $20 billion. Northrop shares were down 3.8%.

Hewlett Packard Enterprise HPE.N climbed 4.4% after the AI server maker raised its long-term revenue growth forecast for its networking business and announced a $1.2 billion deal with Vultr.

Moderna MRNA.O dropped 5.8% after brokerage Citigroup downgraded its rating on the biotech company to "sell" from "neutral".

Advancing issues outnumbered decliners by a 1.52-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.

The S&P 500 posted 8 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 26 new highs and 81 new lows.