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* S&P 500 to end year 2.5% above current level - poll
* 4,200 seen as resistance level for S&P
* Amazon buying MGM for $8.45 bln (Updates to midday, changes byline)
NEW YORK, May 26 (Reuters) - U.S. stocks closed out Wednesday’s session with modest gains as recent comments from Federal Reserve officials helped tamp down concerns about runaway inflation and kept bond yields in check.
Stocks such as Tesla and Alphabet, which have struggled in recent weeks as bond yields advanced due to rising inflation worries, were among the top boosts to the benchmark S&P 500 index with the 10-year U.S. Treasury note holding below the 1.6% level.
On Wednesday, Fed vice chair for supervision Randal Quarles said he was prepared to open talks on reducing the central bank’s emergency support measures, only to also stress the need to remain patient.
“It feels like everybody is giving a very slow but choreographed message that things are improving, we can at least start talking about talking about tightening,” said Andrew Mies, chief investment officer at 6 Meridian in Wichita, Kansas.
“It could be that the wrong Fed governor says the wrong thing in the next couple of weeks and that kicks it off.”
Higher yields pressure growth stocks, many of which are technology and tech-related, whose future cash flows are discounted at higher rates.
Unofficially, the Dow Jones Industrial Average fell 3.47 points, or 0.01%, to 34,308.99, the S&P 500 gained 5.62 points, or 0.13%, to 4,193.75 and the Nasdaq Composite added 71.22 points, or 0.52%, to 13,728.40.
After fears of rising inflation sparked volatility in equity markets in recent weeks, all eyes will be on the closely watched monthly U.S. personal consumption report, the Fed’s favorite inflation gauge, due later in the week.
Multiple Fed officials have commented in recent days on inflation, maintaining the central bank views it as transitory and has the tools to clamp down if it begins to run too hot. However, they have also edged closer to starting the debate about tapering, or reducing, its massive fiscal stimulus plan.
With the S&P 500 sitting less than 1% away from its record high, strategists expect the benchmark index to end the year only about 2.5% above its current level as concerns over increasing inflationary risks weigh, according to a Reuters poll.
Analysts have pointed to the 4,200 level on the S&P 500 as a strong resistance point after several failed attempts to hold above, which could spark more gains should the index manage to convincingly cross.
Trading volumes are likely to lessen heading into the extended Memorial Day holiday weekend, which could exacerbate price moves.
Amazon rose after announcing it is buying MGM, the U.S. movie studio home to the James Bond franchise, for $8.45 billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix and Disney+.
Drug retailers such as Walgreens, CVS Health and Rite Aid Corp all lost ground after a report Amazon is considering the launch of physical pharmacies in the United States.
Ford Motor Co gained after it outlined plans to boost spending on its electrification efforts by more than a third.
Department store operator Nordstrom Inc dropped after reporting a bigger-than-expected quarterly loss, hurt by price markdowns.
Reporting by Chuck Mikolajczak; Editing by Lisa Shumaker