Updates to mid-morning prices, analyst comment

By Johann M Cherian and Twesha Dikshit

Oct 28 (Reuters) - Wall Street's three main indexes hovered near record highs on Tuesday, underpinned by shares of megacap tech stocks such as Microsoft and Apple in a week packed with earnings from U.S. heavyweights.

Microsoft MSFT.O jumped 2.2% after reaching a deal that allows OpenAI to restructure into a public benefit corporation while giving Microsoft a stake of 27% in the ChatGPT maker.

Apple AAPL.O shares crossed $4 trillion in market value for the first time earlier in the day, hitting a record high before easing to trade flat. Strong demand for the latest iPhone models has allayed fears over its slow progress in the AI race.

Microsoft, Alphabet GOOGL.O, Apple AAPL.O, Amazon AMZN.O and Meta META.O are scheduled to report results later in the week with investors scrutinizing any AI-related updates to justify high valuations and hefty investments.

"It's been pretty impressive from our view that we continue to hit all-time highs. Tech and AI and the Big Seven have been driving performance as of late, but earnings have been good as well," said Jack Herr, primary investment analyst at Guidestone.

On the earnings front, global economy bellwether United Parcel Service UPS.N forecast fourth-quarter revenue above expectations, sending shares up 8%. Rival FedEx FDX.N added 1.6%.

S&P 500 earnings are expected to grow 10.5% year-on-year in the third quarter, higher than the 8.8% expected earlier this month, according to LSEG data.

At 11:42 a.m. ET, the Dow Jones Industrial Average .DJI rose 156.56 points, or 0.33%, to 47,701.15, the S&P 500 .SPX lost 0.94 points, or flat, to 6,874.22 and the Nasdaq Composite .IXIC gained 64.50 points, or 0.27%, to 23,701.78.

The S&P 500 tech index .SPLRCT led gains, with AI bellweather Nvidia NVDA.O adding 0.4% after U.S. President Donald Trump said he would meet CEO Jensen Huang.

The U.S. government has been shut down for nearly a month, delaying crucial economic data and forcing traders to rely on private releases and corporate announcements.

Wall Street futures had moved higher after a preliminary estimate of an ADP National Employment Report showed the U.S. economy added an average of 14,250 jobs in the four weeks ending October 11.

Investors also scrutinized layoff reports from companies including Amazon AMZN.O, Paramount PSKY.O and United Parcel Service UPS.N.

Fed officials will meet on Tuesday to discuss interest rates and plans to end the central bank's "quantitative tightening" policy. Its verdict on interest rates is due to be announced on Wednesday.

Markets are now pricing in expectations that the U.S. central bank will lower borrowing costs by 50 basis points by the year-end.

Among others, PayPal PYPL.O surged 11% after it announced a partnership with OpenAI to allow ChatGPT users to buy products using the payment firm's platform.

Alexandria Real Estate ARE.N fell 15.7% after forecasting annual adjusted funds from operations below expectations. That weighed on the S&P 500 real estate index .SPLRCR, sending it down 1.6%.

Skyworks Solutions SWKS.O shot up 12% after announcing plans to merge with smartphone chipmaker Qorvo <QRVO.O

JetBlue Airways JBLU.O shares slumped 9.6% after posting a lower profit for the quarter. Sherwin-Williams <SHW.N> gained 3.8% on upbeat quarterly profit.

Declining issues outnumbered advancers by a 1.52-to-1 ratio on the NYSE and by a 1.47-to-1 ratio on the Nasdaq.

The S&P 500 posted 24 new 52-week highs and 11 new lows while the Nasdaq Composite recorded 66 new highs and 61 new lows.

(Reporting by Johann M Cherian and Twesha Dikshit in Bengaluru; Editing by Pooja Desai and Devika Syamnath)

((johann.mcherian@thomsonreuters.com))