US STOCKS-Wall Street hits record highs on rate-cut optimism; chipmakers rally

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Micron Technology surges after upbeat Q3 rev forecast

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Apple falls as DOJ sues co over antitrust laws

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Dow nears 40,000 points for the first time

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Indexes up: Dow 0.79%, S&P 0.47%, Nasdaq 0.40%

(Updated prices at 02:32 p.m ET/ 1832 GMT)

By Sinéad Carew and Bansari Mayur Kamdar

March 21 (Reuters) - Wall Street's three major stock indexes touched record highs on Thursday as chip stocks rallied following Micron Technology's upbeat forecast, and investors took comfort in the Federal Reserve sticking to its three-rate-cut view for this year.

Shares in Micron Technology were up 16% after hitting an all-time high following a surprise quarterly profit and its forecast of third-quarter revenue above estimates.

Broadcom gained 7% and was the biggest index point boost to the S&P technology sector after TD Cowen upgraded its rating of the stock to "outperform". Nvidia, up 1.5% was also a big boost while the Philadelphia Semiconductor index advanced 2.9%.

U.S. stock indexes had closed higher on Wednesday after U.S. central bankers kept borrowing costs unchanged and indicated they still expect to ease interest rates by three-quarters of a percentage point by the end of 2024.

"Earnings results are keeping semiconductors as market leaders but more broadly a risk on mode has stemmed from the dovish Fed on Wednesday," said Matthew Miskin, Co-Chief Investment Strategist at John Hancock Investment Management.

Fed Chair Jerome Powell said in a press conference after the policy meeting on Wednesday that inflation reports "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road to 2%."

But John Hancock's Miskin questioned whether the Fed is being overly optimistic about inflation and rate cuts.

"They're opening to door to let inflation risk seep back into the market. It's not there yet but it's a risk that could come later this year," he said.

In the meantime, however, economic data released earlier on Thursday was adding to investors' bullish moods.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, while sales of previously owned homes increased by the most in a year in February, signs the economy remained on solid footing in the first quarter.

A separate reading showed flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, came in at 52.2 this month versus 52.5 in February.

At 02:32 p.m. the Dow Jones Industrial Average rose 313.03 points, or 0.79% , to 39,825.16, the S&P 500 gained 24.25 points, or 0.47%, to 5,249.01 and the Nasdaq Composite gained 66.04 points, or 0.40%, to 16,435.45.

The three major indexes hit fresh intra-day record highs, with the Dow coming as close as its ever been to the 40,000 points milestone.

Ten of the 11 major S&P 500 industry sectors were higher, with industrials leading gains, up 1%. The weakest sector was communications services, which was down 0.2% with its biggest drag from Alphabet, down 0.1%.

Apple also bucked the market trend, falling 4% after the U.S. Department of Justice sued the iPhone maker, the first major antitrust effort against the company by the Biden administration, alleging it monopolized smartphone markets.

Goldman Sachs led a banking stock rally, and was last up 4.2%.

IT services provider Accenture fell 9% after it cut its fiscal-year 2024 revenue forecast, with economic uncertainty prompting its clients to cut consulting services spending.

Reddit shares started trading on the New York Stock Exchange at $47, which was 38% higher than its initial public offer price of $34.

Advancing issues outnumbered decliners by a 2.69-to-1 ratio on the NYSE, which showed 843 new highs and 51 new lows.

On the Nasdaq composite 1,849 stocks rose and 1,197 fell as advancing issues outnumbered decliners by a ratio of 1.54-to-1.

The S&P 500 posted 112 new 52-week highs and no new lows while the Nasdaq recorded 331 new highs and 54 new lows.

(Reporting by Sinéad Carew in New York, Bansari Mayur Kamdar and Shashwat Chauhan in Bengaluru; Editing by Shounak Dasgupta, Maju Samuel and Aurora Ellis)