US STOCKS-S&P 500 ends higher after Trump attacks Fed; Nvidia climbs

By Noel Randewich

Aug 26 (Reuters) - The S&P 500 ended higher on Tuesday, lifted by Nvidia and Eli Lilly, while U.S. President Donald Trump's decision to fire a central bank governor deepened concerns about the Federal Reserve's independence.

Nvidia NVDA.O rose ahead of its quarterly report on Wednesday, which will show how the world's most valuable company is faring in the crossfire of Washington and Beijing's ongoing trade war. The chipmaker's report could also fuel - or dampen - Wall Street's rally in AI-related stocks.

Trump late on Monday said he was removing Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, adding to concerns about the central bank's independence from politics. S&P 500 futures briefly sank before the stock market recovered as investors focused on unchanged expectations that the central bank will begin cutting interest rates in September.

"The financial market community is increasingly concerned about that independence. That is a real concern over the long run. But over the short run, how much does it change the trajectory of interest rate policy in the next six to 12 months? I think the writing has already been on the wall that we get easier monetary policy in the next six to 12 months," said Bill Merz, head of Capital Market Research at U.S. Bank Wealth Management, Minneapolis.

Despite lingering inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for the Fed's September policy meeting, encouraged by dovish signals from Fed Chair Jerome Powell, data pointing to labor market weakness and a shakeup at the central bank.

Morgan Stanley became the latest brokerage to forecast an interest-rate cut in September, but key upcoming inflation and jobs reports could prompt investors to reassess expectations.

Eli Lilly LLY.N jumped after the drugmaker said its experimental pill cuts body weight by 10.5% in diabetes patients.

The S&P 500 is trading at about 23 times expected earnings, a four-year high, heightening the risk of a selloff if Nvidia's results dent Wall Street's enthusiasm for AI-related stocks.

According to preliminary data, the S&P 500 .SPX gained 26.54 points, or 0.41%, to end at 6,465.86 points, while the Nasdaq Composite .IXIC gained 94.46 points, or 0.44%, to 21,543.76. The Dow Jones Industrial Average .DJI rose 134.18 points, or 0.30%, to 45,416.65.

Advanced Micro Devices AMD.O gained after Truist Securities upgraded the chip stock to "buy" from "hold."

EchoStar SATS.O surged to a record high after telecom giant AT&T T.N said it has agreed to buy certain wireless spectrum licenses from the satellite communications firm for about $23 billion.