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

* US factory activity slips for a second month in May, ISM says

* NYSE Equities investigates technical issue related to LULD bands

* Nvidia up as next-gen AI chip platform to be rolled out in 2026

* GameStop soars after Keith Gill's Reddit post shows $116 mln bet

* Indexes: Dow off 0.12%, S&P up 0.22%, Nasdaq up 0.62%

June 3 (Reuters) -

The Nasdaq and the S&P 500 inched up on Monday as falling U.S. Treasury yields boosted megacap growth stocks, while investors assessed data that showed local manufacturing activity had eased for the second consecutive month in May.

Megacap stocks including Apple, Meta and Alphabet gained between 1.1% and 1.7%, as yields on the benchmark U.S. 10-year and five-year notes fell around 10 basis points each.

AI leader Nvidia rose 3.4%, leading a 0.8% charge in the Philadelphia SE Semiconductor Index. Chief executive Jensen Huang said on Sunday the company's next-generation AI chip platform would be rolled out in 2026.

Shares of GameStop soared 26.8% after a weekend Reddit post from stocks influencer Keith Gill, also known as "Roaring Kitty," showed a $116 million bet on the gaming retailer.

Elsewhere, NYSE Equities said it was

investigating a reported technical

issue that sent dozens of stocks listed on the exchange into volatility pauses.

Six of the 11 S&P 500 sectors gained, led by a 0.9% rise in tech, while energy lost 1.7%.

Signaling a cooling economy, a

survey from the Institute for Supply Management

showed manufacturing activity eased to 48.7 in May, lower than the expectation of 49.6.

Yields began retreating from one-month highs on Friday as investors increased bets on a September start to interest-rate cuts by the Federal Reserve after inflation showed signs of cooling, as measured by the Personal Consumption Expenditures Price Index.

However, despite the S&P 500 and the Nasdaq snapping their five-week winning streaks on Friday, all three of Wall Street's main indexes ended May with strong gains.

The S&P 500 rose 4.8%, the Dow climbed 2.3% and the tech-heavy Nasdaq rose nearly 7% last month, as strong earnings and hopes of easing monetary policy buoyed Wall Street's biggest stocks.

"AI drivers, earnings and inflation will continue to drive the market," said Sam Stovall, chief investment strategist at CFRA Research.

Attention turns to crucial data this week, including surveys on the manufacturing and services sector, factory orders and Friday's closely watched nonfarm payrolls report, which will provide investors with clues on the health of the U.S. economy and the Fed's likely course of action.

"We're going to be looking at employment data this Friday and we're getting a whole slew of economic reports, so inflation will still be very much foremost in investors' minds," Stovall said.

At 10:14 a.m. ET, the Dow Jones Industrial Average was down 46.63 points, or 0.12%, at 38,639.69, the S&P 500 was up 11.74 points, or 0.22%, at 5,289.25, and the Nasdaq Composite was up 103.70 points, or 0.62%, at 16,838.71.

The blue-chip Dow underperformed, weighed by a drop in financial stocks such as Goldman Sachs and JPMorgan Chase & Co.

Paramount Global rose 7.1% after a report that Skydance Media was poised to take over the company.

JetBlue Airways

forecast a smaller drop

in second-quarter revenue than previously forecast due to healthy travel demand, sending its shares up

4.7

%.

Advancing issues outnumbered decliners by a 1.34-to-1 ratio on the NYSE

and

by a 1.38-to-1 ratio on the Nasdaq

.

The S&P index recorded

18

new 52-week highs and three new lows, while the Nasdaq recorded

39

new highs and

46

new lows. (Reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai)