US STOCKS-S&P 500, Nasdaq advance as investors await key economic data

By Twesha Dikshit and Nikhil Sharma

Feb 9 (Reuters) - The S&P 500 and the Nasdaq gained after a shaky start on Monday, finding their footing following last week's AI-sparked tech rout, while investors focused on key economic data that could shed light on the Federal Reserve's interest-rate path.

Software companies clawed back losses after a bruising week in which fears that rapidly progressing AI could intensify competition and squeeze margins sent them tumbling. The S&P 500 Software Services index .SPLRCIS gained 2.4% on the day.

ServiceNow NOW.N rose 2.1%, while Salesforce CRM.N and CrowdStrike CRWD.O gained 1.6% each.

The Dow hit an intraday record high, after surpassing 50,000 points for the first time on Friday, supported by a rotation into other pockets of the market. The small-cap Russell 2000 index .RUT gained 0.8%

The Nasdaq was about 3.1% away from its peak in October end, while the S&P 500 was 0.5% shy of its all-time high in January.

But caution lingered as investors were still uneasy over Big Tech's ambitious capital expenditure plans. Amazon AMZN.O, Alphabet GOOGL.O, Meta META.O and Microsoft MSFT.O together are poised to spend around $650 billion in the race to dominate AI.

"It's an eye-popping number, $650 billion... and that's not something that investors are used to," said Anna Rathbun, founder and CEO of Grenadilla Advisory.

"There was already fatigue of being surprised on the upside for AI investment when we were coming into this year, so this is investors not being used to such a high ticket price for AI investment and also being wary where the return from these investments are going to come from."

At 11:18 a.m. ET, the Dow Jones Industrial Average .DJI fell 24.30 points, or 0.05%, to 50,091.37. The S&P 500 .SPX gained 33.68 points, or 0.49%, to 6,965.98, while the Nasdaq Composite .IXIC advanced 211.97 points, or 0.92%, to 23,243.19.

The S&P 500 technology index .SPLRCT and the Philadelphia SE Semiconductor index .SOX were up around 1.5% each.

The next big test for AI-related stocks will be chip giant Nvidia's NVDA.O earnings later this month, with investors increasingly demanding measurable gains from capex plans. Nvidia rose 3.4%.

Investors will also monitor the January nonfarm payrolls report due on Wednesday, which was delayed by a partial government shutdown, and the closely watched January Consumer Price Index on Friday.

Markets are currently pricing in the year's first interest-rate cut in June, according to CME Group's FedWatch tool, which could be when U.S. President Donald Trump's nominee for Fed chair, Kevin Warsh, takes over.

Investors will tune into the comments from Fed members Christopher Waller, Stephen Miran and Raphael Bostic through the day.

Among stock movers, Hims & Hers Health HIMS.N sank 24%. Novo Nordisk NOVOb.CO sued the telehealth firm for patent infringement after the U.S. firm launched, then canceled, a $49 copy of the Danish drugmaker's weight-loss pill Wegovy following backlash from the U.S. Food and Drug Administration.

Workday WDAY.O slid 6.8% after the human resources software provider announced co-founder Aneel Bhusri will return as its CEO.

Apollo Global Management APO.N rose 2.2% after the asset manager reported a 13% rise in fourth-quarter profit.

Kyndryl KD.N slumped 55% after the IT services provider delayed its quarterly filing and flagged material weakness in its financial reporting.

Kroger's KR.N shares added 6.3% after the grocery giant named former Walmart executive Greg Foran as its CEO.