US STOCKS-Wall St subdued as Trump attacks Fed again; Nvidia results in focus

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Indexes: Dow slips 0.04%, S&P 500 up 0.01%, Nasdaq up 0.09%

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EchoStar (SATS) jumps after AT&T (T) to buy spectrum licenses for $23 bln

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AMD gains on Truist Securities' bullish upgrade

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Eli Lilly (LLY) up as pill cuts weight by 10.5% in diabetes patients

(Updates with late morning prices)

By Johann M Cherian and Sanchayaita Roy

Aug 26 (Reuters) - Wall Street's main indexes were flat on Tuesday, constrained by a rise in Treasury bond yields as President Donald Trump's decision to fire a central bank governor deepened concerns about the Federal Reserve's independence.

Investors also awaited Nvidia's (NVDA) results and a key inflation report later this week for more insight on artificial intelligence and interest rate cuts - the two big themes behind recent market gains.

Earlier in the session, futures dropped after Trump said he was removing Fed Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, prompting investor unease about what it could also mean for the outlook on monetary policy just weeks ahead of the central bank's meeting.

The uncertainty was evident as longer-dated Treasury bonds and the dollar remained under pressure.

Trump's action is likely to face legal challenges but, if successful, it would let him nominate a new member to the Fed's board at a time when he has called for lower interest rates.

"We've actually been pretty impressed by how the market has absorbed this one. I still have confidence that the Fed's going to operate independently regardless of the Trump administration," said Mark Hackett, chief market strategist at Nationwide.

Despite lingering inflation pressures, traders have been pricing in a 25-basis-point interest rate cut for September, encouraged by dovish signals from Fed Chair Jerome Powell, data pointing to labor market weakness and a shake up at the central bank.

"This is not generally the environment where you get aggressive Fed rate cuts ... but obviously the market expects it so the Fed may have been backed into a little bit of a corner here," Hackett said.

Morgan Stanley became the latest brokerage to forecast an interest-rate cut in September, but key upcoming inflation and jobs reports could prompt investors to reassess expectations.

At 11:51 a.m. ET, the Dow Jones Industrial Average fell 18.37 points, or 0.04%, to 45,264.10, the S&P 500 gained 0.33 points, or 0.01%, to 6,439.65 and the Nasdaq Composite gained 19.40 points, or 0.09%, to 21,468.69.

Seven of the 11 S&P 500 sectors edged lower, with energy leading losses, tracking lower oil prices.

Nvidia's (NVDA) results on Wednesday will be a major catalyst for U.S. stocks that have rallied over the past few years on the potential earnings growth from AI.

The AI enthusiasm has also pushed up valuations of Wall Street's benchmark S&P 500 to above long-term averages, heightening the risk of a selloff in case the chip giant falls short of market expectations.

Advanced Micro Devices (AMD) gained 1.4% after Truist Securities upgraded the chip stock to "buy" from "hold".

Eli Lilly (LLY) rose 4.2% after the drugmaker said its experimental pill cuts body weight by 10.5% in diabetes patients.

EchoStar (SATS) jumped 77%, hitting a record high, after telecom giant AT&T (T) said it has agreed to buy certain wireless spectrum licenses from the satellite communications firm for about $23 billion.

Declining issues outnumbered advancers by a 1.06-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.22-to-1 ratio on the Nasdaq.

The S&P 500 posted 14 new 52-week highs and two new lows while the Nasdaq Composite recorded 76 new highs and 38 new lows. (Reporting by Johann M Cherian and Sanchayaita Roy in Bengaluru; Editing by Devika Syamnath)