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US STOCKS-Wall Street surges, on course to snap longest weekly losing streak in decades

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* PCE price index decelerates in April

* Dell climbs on strong Q1 results

* Gap, American Eagle Outfitters cut profit forecasts

* Indexes up: Dow 1.05%, S&P 1.72%, Nasdaq 2.56% (New throughout, adds NEW YORK dateline)

By Stephen Culp

NEW YORK, May 27 (Reuters) - Wall Street extended its rally on Friday as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism that the Federal Reserve's policy tightening can avoid tipping the economy into recession.

All three major U.S. stock indexes were sharply higher and on track to snap their longest weekly losing streaks in decades.

"We’re in one of those rebound periods," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "Does that mean that the market has found its bottom? We’ll have to see how much staying power this advance has."

"It feels good but something tells me that the selling is not over," Ghriskey added.

The S&P and the Nasdaq suffered seven consecutive weekly declines, the longest since the end of the dot-com bust, while the blue-chip Dow's eight-week selloff was its longest since 1932.

During the S&P's seven weeks of consecutive losses, the bellwether index shed 14.2% of its value, from its April 1 to May 20 Friday closes, during which it threatened to confirm it has been in a bear market since its Jan. 3 record closing high.

"It was inevitable that the losing streak would end," Ghriskey said. "Corrections and bear markets are followed by up markets."

Generally upbeat earnings guidance and solid economic indicators have fueled hopes that the Fed's hawkish maneuvers to contain decades-high inflation will not cool the economy into contraction.

Data released on Friday showed better-than-expected consumer spending and appeared to confirm that inflation, which has dampened corporate earnings guidance and weighed on investor sentiment, has peaked.

This, combined with the minutes from the central bank's most recent policy meeting, which reaffirmed its commitment to rein in spiking prices while remaining responsive to economic data, helped boost risk appetite.

The Dow Jones Industrial Average rose 342.23 points, or 1.05%, to 32,979.42, the S&P 500 gained 69.97 points, or 1.72%, to 4,127.81 and the Nasdaq Composite added 300.70 points, or 2.56%, to 12,041.35.

All 11 major sectors of the S&P 500 were in positive territory amid light trading, with real estate and tech enjoying the largest percentage gains.

Shares of Apple Inc, Microsoft Corp and Tesla Inc provided the strongest lift.

First-quarter earnings season is largely in the bag, with 488 of the companies in the S&P 500 having reported. Of those, 77% have beaten consensus expectations, according to Refinitiv.

Ulta Beauty gained 10.4% following its upbeat quarterly earnings report.

Computer hardware company Dell Technologies Inc surged 12.1% after beating quarterly profit and revenue estimates.

Apparel retailers Gap Inc and American Eagle Outfitters trimmed their annual profit forecasts. The latter dropped 5.5%, while the former rebounded and was last up 2.9%.

Trading volumes are expected to be light ahead of the long weekend, with U.S. stock markets closed on Monday in observance of Memorial Day.

Advancing issues outnumbered declining ones on the NYSE by a 5.96-to-1 ratio; on Nasdaq, a 3.77-to-1 ratio favored advancers.

The S&P 500 posted 3 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 36 new highs and 75 new lows. (Reporting by Stephen Culp in New York Additional reporting by Devik Jain and Anisha Sircar in Bengaluru Editing by Vinay Dwivedi and Matthew Lewis)