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Walt Disney slumps on weaker TV business in Q2

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Tesla falls on China-made EV sales drop in April

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Palantir slides on lower-than-expected annual rev. forecast

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Indexes up: Dow 0.08%, S&P 0.14%, Nasdaq flat

(Updated to 1755 GMT/1355 Eastern time)

By Shristi Achar A and David French

May 7 (Reuters) - U.S. stock indexes rose on Tuesday, on track for a fourth straight positive session fueled by renewed expectations that the Federal Reserve will cut interest rates this year, despite declines in Walt Disney shares weighing on overall market gains.

Walt Disney fell 9.8%, on track for its biggest percentage fall since November 2022, as a surprise profit in its streaming entertainment division was eclipsed by a drop in its traditional TV business and weaker box office.

Despite Disney's drag, the three main U.S. stock indexes were trading at a more than three week high after a weaker-than-expected labor market report last week fueled bets that the U.S. central bank will cut rates.

Generally, the Fed and policymakers have been consistent in their message in recent weeks, that rate cuts will come but the central bank is going to be cautious in implementing them - a message repeated on Monday by Federal Reserve Bank of New York President John Williams and Richmond Federal Reserve President Thomas Barkin.

This meant, on a day lacking major data announcements, markets shrugged off comments from Minneapolis Federal Reserve President Neel Kashkari that the Fed may need to hold rates steady for the remainder of the year due to stalled inflation and housing market strength.

Overall, Friday's payrolls data and better-than-expected earnings reports have helped soothe investor jitters around sticky inflation and a robust economy that have kept the rates elevated.

"We've just come through an earning season that has improved people's perception of the earnings outlook, we're in this period where we don't see a ton of upside but certainly think that the pro-risk environment we've seen for the past week or so continues in the coming month," said Greg Boutle, head of US equity and derivative strategy at BNP Paribas.

He also added that the market "can't go straight from being worried about the economy being too hot to too cold overnight."

Traders are anticipating rate cuts of 46 basis points (bps) from the Fed by the end of 2024, according to LSEG's interest rate probabilities app, with the first pivot to rate cut seen in September and another in December. They were expecting only one cut before the labor report last week.

At 01:55 p.m. Eastern ,the S&P 500 gained 7.22 points, or 0.14%, to 5,187.96 points, while the Nasdaq Composite lost 2.15 points, or 0.01%, to 16,347.09. The Dow Jones Industrial Average rose 30.42 points, or 0.08%, to 38,882.69.

The S&P 500 and the Nasdaq looked to extend gains for a fourth straight session in what would be their longest winning streak since March. The Dow was set for a fifth consecutive day of gains, its longest run of gains since December 2023.

Megacap stocks Alphabet and Meta Platforms rose 1.6% and 0.4%, respectively, boosting the main indexes.

Nvidia fell 1.1% after the Wall Street Journal reported that Apple was developing its own chip to run artificial intelligence (AI) software in data centers.

Apple gained 0.4% as it introduced a new chip called the M4, but put the new chip in an iPad Pro model rather than a laptop.

Tesla fell 3% after data showed the U.S. automaker sold 62,167 China-made electric vehicles in April, down 18% from a year earlier.

Palantir Technologies tumbled 14.7% after the data analytics firm's annual revenue forecast fell short of analysts' estimates.

Overall, nine of the 11 S&P sectors were trading higher, led by real estate and materials. (Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru and David French in New York; Editing by Shinjini Ganguli and Aurora Ellis)