S&P 500, Dow gain amid inflation concerns, debt ceiling debate

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FILE PHOTO: A Wall Street sign outside the New York Stock Exchange
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By Stephen Culp

NEW YORK (Reuters) - Wall Street ended firmer on Wednesday in a partial rebound from the previous day's broad sell-off, with remarks from U.S. Federal Reserve Chairman Jerome Powell and the ongoing debt ceiling debate keeping a lid on gains.

The S&P 500 index and the Dow Jones Industrial Average advanced, but the Nasdaq Composite closed lower as Treasury yields halted their ascent. Defensive sectors took the lead as investors sought stability in the volatile market.

All three remain on course to post monthly declines, with the bellwether S&P 500 snapping a seven-month winning streak.

"The same story we've seen for a couple of weeks," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.

"Investors are concerned about three things: the eventual taper of bond purchases by the Fed, ongoing inflation with Chairman Powell saying it's going to stick around longer than initially expected, and the debt ceiling issue that congress is grappling with."

Powell, speaking at a European Central Bank event, expressed frustration over persistent supply chain woes which could keep inflation elevated for longer than expected.

The stock market strengthened following his remarks.

"Powell has been very good at delivering the news officially that everyone knows is coming," Pursche said.

Wrangling continued on Capitol Hill over funding the government as the Friday deadline to prevent a shutdown approached, with mounting concerns over a U.S. credit default.

U.S. Treasury yields paused after a runup in recent days as the debt ceiling debate unfolded in Washington.

The Dow Jones Industrial Average rose 90.73 points, or 0.26%, to 34,390.72; the S&P 500 gained 6.83 points, or 0.16%, at 4,359.46; and the Nasdaq Composite dropped 34.24 points, or 0.24%, to 14,512.44.

Of the 11 major sectors in the S&P 500, materials suffered the largest percentage drop, with utilities leading the way with a 1.3% gain.

Boeing Co provided the biggest lift to the Dow following China's aviation regulator's successful 737 MAX test. The planemaker's shares rose 3.2%.

Discount retailer Dollar Tree Inc jumped 16.5% after increasing its buyback authorization by $1.05 billion to $2.5 billion.

Drugmaker Eli Lilly & Co gained 4.0% on Citigroup's rating upgrade to "buy" from "neutral."

Advancing issues outnumbered decliners on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored decliners.

The S&P 500 posted seven new 52-week highs and two new lows; the Nasdaq Composite recorded 38 new highs and 151 new lows.

Volume on U.S. exchanges was 11.42 billion shares, compared with the 10.45 billion average over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Devik Jain in Bengaluru; Editing by Richard Chang)