Nasdaq hits record 17,000 as inflation data looms

The Dow Jones Industrial Average closed by 0.55 percent, settling at 38,852.86 points. The S&P 500 gained 0.02 percent to reach 5,306.04 points by the end of the day. The Nasdaq Composite rose by 0.59 percent, closing the session at 17,019.88 points. The small-cap Russell 2000 index fell by 0.16 percent to 2,066.47 points.

This week, investor attention will focus on macroeconomic data, including the Fed's preferred measure of inflation—the PCE deflator for April—and the preliminary reading of the consumer price index for the Eurozone for May. This data will help assess the path for the European Central Bank's interest rates before their meeting next week.

According to the CME FedWatch tool, investors see a 51.2 percent chance that the first interest rate cut of at least 25 basis points will occur in September, compared to a 49.4 percent probability recorded on Friday.

Minneapolis Federal Reserve President Neel Kashkari said in an interview with CNBC on Tuesday that the Federal Reserve should wait for significant progress on inflation before cutting interest rates.

Many more months of positive inflation data, I think, to give me confidence that it's appropriate to dial back - said Kashkari.

According to the Conference Board report, the consumer confidence index rose to 102 points in May from 97.5 points a month earlier, following a revision from 97 points. Analysts had expected the index to be 96 points.

While Nvidia's rally concealed troubles in the broader market, the blue-chip Dow was weighed down by declines in Merck and other healthcare names. Meanwhile, over 350 companies in the broad S&P 500 index posted losses during the session. The healthcare, industrial, and financial sectors within the index ended the session over 1 percent down.

The yield on 10-year Treasury bonds returned above the critical level of 4.5 percent after a government auction met with weak demand, affecting sentiment. The yield on 10-year bonds was last up by nearly 7 basis points.

Tuesday's moves come at the end of a strong month in which all three main indexes hit new record levels. Softer inflation data earlier this month and better-than-expected quarterly earnings reports improved sentiment, suggesting that Federal Reserve rate cuts might come sooner than investors had expected.

The Dow has risen by over 2.5 percent since the beginning of May, while the S&P 500 and Nasdaq have increased by over 5 percent and 8 percent respectively.

"We could see a little bit of choppiness this week. But overall, I think the market is bullish," said Larry Tentarelli, founder of Blue Chip Daily Trend Report.

UBS Global Research raised its year-end target level for the benchmark S&P 500 index, which is just below its highest historical values, to 5,600 points from the previous forecast of 5,400 points, representing the highest forecast among significant brokerage houses.

Apple rose slightly after iPhone sales in China increased by 52 percent in April compared to the previous year, according to Reuters calculations based on industry data.

GameStop shares jumped 25 percent after the video game retailer announced on Friday that it had raised $933 million by selling 45 million shares in a new offering.

In the oil market, July WTI contracts rose by 3.15 percent to $80.17 per barrel, while July Brent futures increased by 1.65 percent to $84.47 per barrel.