Updates to mid-afternoon trading

By Stephen Culp and Ragini Mathur

NEW YORK, May 11 (Reuters) - Wall Street was modestly higher on Monday, with the earnings-driven fervor of the recent rally easing as stalled U.S.-Iran peace negotiations and the ongoing closure of the Strait of Hormuz drove crude prices higher and exacerbated inflation worries.

Even so, artificial intelligence-related momentum continued unabated, with chipmakers handily outperforming the broader market.

All three major U.S. stock indexes were higher and the S&P 500 and the Nasdaq bound for the latest in a series of all-time closing highs.

Semiconductors handily outshone other sectors, with the PHLX Semiconductor index .SOX jumping 2.5%, suggesting the AI wave is showing few signs of abating.

"The semis and AI infrastructure trade has taken on a life entirely of its own," said Ross Mayfield investment strategy analyst at Baird in Louisville, Kentucky. "And there's so much momentum and chasing to get in on some of these names that it seems almost somewhat divorced from any sort of like headline or announcement."

First-quarter reporting period is on the home stretch, with 440 of the companies in the S&P 500 having reported. Of those, 83% have topped earnings expectations, according to LSEG IBES.

As of Friday, analysts estimated first-quarter S&P 500 earnings growth, on aggregate, of 28.6% year-on-year. That's nearly double the 14.4% first-quarter growth estimates as of April 1.

But as earnings season nears the finish line, focus returns to macroeconomics and geopolitical developments.

President Donald Trump dismissed Iran's response to a U.S. peace proposal, causing crude prices to spike and stoking concerns that a prolonged conflict will keep putting upward pressure on inflation, particularly at the gasoline pump, where consumers are feeling the pinch.

On that point, investors will pay close attention to economic indicators this week, particularly the Labor Department's Consumer Price Index and the retail sales report from the Commerce Department, scanning the data for signs that ongoing surge in energy prices are metastasizing into broader inflation or affecting consumer spending.

"It's been easy for investors to put Iran to the side while earnings were so unbelievable, but with this week's inflation data, I think you could very easily be a flashpoint, bringing the Iran news back to the forefront of investors' minds," Mayfield added. "It's a rally that has been incredible, but will probably consolidate from here a little bit, and I wonder if CPI and PPI will be catalysts for some of that profit-taking action."
Producer prices and industrial output are also on this week's economic calendar.

Later this week President Trump is due to meet his Chinese counterpart Xi Jinping in Beijing for talks covering a broad range of issues, including the Iran war, trade, nuclear weapons, Taiwan, artificial intelligence and possible extension of a critical rare earth minerals deal.

The Dow Jones Industrial Average .DJI rose 134.28 points, or 0.27%, to 49,743.44, the S&P 500 .SPX gained 28.14 points, or 0.38%, to 7,427.07 and the Nasdaq Composite .IXIC gained 89.17 points, or 0.34%, to 26,336.86.

Among the 11 major sectors of the S&P 500 energy stocks .SPNY boasted the largest percentage gains, while communication services .SPLRCL were the biggest laggards.

Major names due to report this week include tech networking giant Cisco CSCO.O and semiconductor equipment maker Applied Materials AMAT.O, while heavyweights Nvidia NVDA.O and Walmart WMT.O are due to report later in the month.

On Monday, Intel INTC.O rose 2% after surging 14% on Friday on a report of a preliminary chip-making agreement with Apple AAPL.O, while peer Qualcomm QCOM.O jumped 7.6% to a record high.

Media major Fox Corp FOXA.O rose 4.7% after beating third-quarter revenue estimates.

Among other movers, some airline stocks slipped as rising oil prices threatened to squeeze margins. Southwest Airlines LUV.N, Delta Air Lines DAL.N, Alaska Air ALK.N and United Airlines UAL.O fell between 2.0% and 4.3%.

There were 457 new highs and 127 new lows on the NYSE.

On the Nasdaq, 2,277 stocks rose and 2,498 fell as declining issues outnumbered advancers by a 1.1-to-1 ratio.

The S&P 500 posted 36 new 52-week highs and 38 new lows while the Nasdaq Composite recorded 144 new highs and 139 new lows.