Updates prices throughout, adds details on SpaceX shares

By Johann M Cherian and Twesha Dikshit

June 12 (Reuters) - The benchmark S&P 500 see-sawed between marginal gains and losses on Friday, ahead of the market debut of Elon Musk's SpaceX, while hopes for an imminent Middle East peace deal buoyed overall sentiment.

U.S. President Donald Trump's comments on Thursday suggested that a deal to end the Middle East conflict and reopen the crucial Strait of Hormuz could be signed as early as this weekend. However, Tehran said that the final decision was pending.

The spotlight is now on SpaceX SPCX.O, which is expected to start trading on the Nasdaq for the first time later in the day and is likely to be immediately ranked among the biggest publicly listed U.S. companies.

The stock was indicated to open at $174, nearly 30% above its IPO share price, putting its valuation around $2 trillion. Only about 3% to 4% of SpaceX's shares SPCX.O are expected to be available for trading, with a large allocation to retail investors.

"What we've seen with many high-profile IPOs is an initial surge in price followed by a period where investors give some of those gains back," said Jay Woods, chief strategist at Freedom Capital Markets.

"My concern is that retail investors who receive allocations may not take profits soon enough and could get hurt if the stock pulls back."

Shares of other space stocks, which have soared in the lead-up to the debut, eased on Friday. Rocket Lab RKLB.O fell 8.2%, Intuitive Machines LUNR.O and Planet Labs PL.N shed 10% and 7.5%, respectively, while funds holding shares of SpaceX such as Fundrise Innovation Fund VCX.N rose 17.7%.

Nine of 11 major S&P 500 sectors moved higher, with materials .SPLRCM leading with a 1.6% rise.

Chip stocks were volatile, with Intel INTC.O last up 3.8%, while Advanced Micro Devices AMD.O added 7% after Citigroup raised its rating to "buy" from "neutral". Megacaps such as Amazon.com AMZN.O fell 2% and Microsoft MSFT.O dropped 1.7%.

U.S. equity funds saw their first weekly outflow in three, and earlier this week the technology index .SPRLCT confirmed a correction. Analysts believe some of the weakness in U.S. stocks and bitcoin's BTC= 16% fall last week could be due to traders trimming holdings ahead of SpaceX's debut.

At 10:26 a.m. ET, the Dow Jones Industrial Average .DJI rose 175.90 points, or 0.35%, to 51,027.28, the S&P 500 .SPX gained 15.55 points, or 0.21%, to 7,409.88 and the Nasdaq Composite .IXIC gained 1.31 points, nearly flat, to 25,810.97.

Still, the three main U.S. stock indexes are set for a muted end to the week, amid uncertainty surrounding the Iran conflict and concerns that a rally in AI stocks has gone too far.

SpaceX, which also includes Starlink and xAI, has already defied some Wall Street conventions. Index providers such as Nasdaq and FTSE Russell have tweaked their entry requirements for its inclusion, while the company also set its stock price at $135, even before the roadshow began, reflecting Musk's sway over the IPO.

Some analysts have, however, voiced caution over the fundamentals of the company, which posted more than $4 billion in annual losses last year.

On the macro front, a survey showed that consumer sentiment fared better than expected this month, while data earlier this week showed inflation pressures were mounting.

However, following Trump's remarks on Thursday, traders pushed their expectations for an interest rate hike by the Federal Reserve to December from October earlier this week, the CME Group's FedWatch tool showed.

Adobe ADBE.O slid 8.3% after the exit of CFO Dan Durn.

Advancing issues outnumbered decliners by a 1.81-to-1 ratio on the NYSE, and by a 1.46-to-1 ratio on the Nasdaq.

The S&P 500 posted 30 new 52-week highs and 10 new lows, while the Nasdaq Composite recorded 141 new highs and 46 new lows.