* Producer prices increase more than expected in April

* Fed's Powell: PPI 'mixed', next move unlikely to be a rate hike

* Meme stocks extend gains from Monday

* Home Depot shares fall after report

* Indexes up: Dow 0.23%, S&P 0.34%, Nasdaq 0.62%

May 14 (Reuters) - Wall Street's main indexes rose on Tuesday as investors assessed a mixed producer prices report and awaited crucial consumer prices data expected early Wednesday to provide more clarity on the U.S. interest rate path.

U.S. producer prices increased more than expected in April as the cost of services and goods rose sharply, leading traders to pare back bets of a first rate cut in September.

But Federal Reserve Chair Jerome Powell said on Tuesday the producer price index report was more mixed than hot given that prior-period data was revised lower.

Investors also found reassurance in Powell's comment that he did not expect the central bank's next interest rate move to be an increase, despite the recent run of higher-than-expected inflation.

"That's why (Treasury) yields are down and that's probably helping a lot of areas like small caps," said Sonu Varghese, Global Macro Strategist at Carson Group.

Investors awaited Wednesday's Consumer Price Index figures to assess whether upside surprises in the first quarter were a blip or a worrying trend.

"Policy is going to be determined by what happens with inflation so the indices are sort of holding in place until we get more information," said Varghese.

Sticky inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September, from March seen at the start of the year.

Stocks have rallied so far this year, with all three major U.S. indexes hovering near fresh record highs thanks to better-than-expected earnings for the first quarter and hopes that the Fed will cut rates sometime this year.

At 2:36 p.m. ET, the Dow Jones Industrial Average rose 89.52 points, or 0.23%, to 39,521.03, the S&P 500 gained 17.57 points, or 0.34%, at 5,238.99 and the Nasdaq Composite rose 101.58 points, or 0.62%, to 16,489.82.

The Russell 2000 small cap index outperformed large caps with an almost 1% gain.

Shares in Home Depot fell 0.4% after the retailer posted a bigger-than-expected drop in quarterly same-store sales as cautious Americans shelled out less for big-ticket items while focusing on small-scale home repair and maintenance tasks.

U.S.-listed shares of Alibaba shed 6.8% after reporting an 86% drop in fourth-quarter profit.

On Holding climbed 18% as the footwear maker raised its annual sales forecast after beating quarterly sales expectations, citing strong demand for its running shoes.

U.S. President Joe Biden unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

U.S.-listed shares of Chinese EV maker Li Auto slid 2.8%, while Tesla gained 2.9%.

GameStop shares jumped 53%, extending its recent rally after flag bearer Roaring Kitty posted on X.com for the first time in three years.

Other 2021 meme rally participants and highly shorted stocks AMC Entertainment and Koss Corp each rose around 30%.

Advancing issues outnumbered decliners by a 2.21-to-1 ratio on the NYSE where there were 282 new highs and 23 new lows.

On the Nasdaq, advancing issues outnumbered decliners by a 1.72-to-1 ratio and it recorded 127 new highs and 69 new lows.

The S&P 500 posted 27 new 52-week highs and no new lows. (Reporting by Sinéad Carew in New York, Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by Sriraj Kalluvila, Devika Syamnath and Richard Chang)