Stocks edge higher after Fed comments, ahead of Nvidia

Lowe's warns of margin pressure in Q2

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IBM rises after it makes more AI models open-source

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Nvidia options imply 8.7% swing after earnings

NEW YORK, May 21 (Reuters) - U.S. stocks closed with slight gains on Tuesday as investors assessed the latest round of comments from Federal Reserve officials for clues on the timing of a rate cut and the quarterly earnings from Nvidia drew closer.

Nvidia, Wall Street's third-largest firm by market capitalization, will report results after the closing bell on Wednesday in what is likely to be a significant market catalyst and will test whether the outsized rally in AI-related stocks can be sustained.

Nvidia's options are primed for an 8.7% swing, or $200 billion in market cap, in either direction by Friday, according to data from options analytics firm Trade Alert. The chipmaker's shares were up modestly on Tuesday and are up about 92% on the year, after surging nearly 240% in 2023.

Investors also looked toward minutes from the Fed's most recent policy meeting, due on Wednesday, after multiple Fed officials on Tuesday reinforced the stance that it would be best for the central bank to exercise patience before starting to cut interest rates.

"Investors are sort of just sitting on their hands for today because there are two important things that will be coming out tomorrow, Fed minutes combined with Nvidia earnings, so I don't think people want to make any big bets ahead of that," said Sam Stovall, chief investment strategist of CFRA Research in New York.

He said the Fed was "still very much data-dependent and as a result, they're going to do what the data tells them to do and that's pretty much it, but Wall Street is going to continue to forecast, ourselves included, that the Fed will start to cut rates in September."

Markets are currently pricing in a 64.8% chance for a cut of at least 25 basis points at the central bank's September meeting, according to CME's FedWatch Tool.

According to preliminary data, the S&P 500 gained 13.96 points, or 0.26%, to end at 5,322.09 points, while the Nasdaq Composite gained 38.51 points, or 0.23%, to 16,833.38. The Dow Jones Industrial Average rose 74.87 points, or 0.19%, to 39,881.64.

The S&P 500 traded in a range of about 27 points on the session.

Retailers were lower as a flurry of quarterly reports from the group signals the winding down of earnings season, with Lowe's shares ending lower after the home improvement company warned of operating-margin pressure in the current quarter.

Automotive parts retailer AutoZone declined after a third-quarter sales miss, weighing on the S&P 500 retail index , which also lost ground on the day.

Macy's gained after the department store operator raised its annual profit forecast, despite posting a bigger-than-expected drop in sales for the first quarter.

JPMorgan Chase rose, recovering some of Monday's 4.5% drop, helping fuel a climb in the S&P 500 banks index.

International Business Machines advanced on plans to release a family of artificial intelligence models as open-source software and help Saudi Arabia train an AI system in Arabic.

(Reporting by Chuck Mikolajczak in New York Editing by Matthew Lewis)