Wall Street stocks jumped on Wednesday as a rally in tech stocks boosted the Nasdaq above the 20,000-point milestone for the first time, after a U.S. inflation report boosted expectations of a Federal Reserve interest rate cut.
A Labor Department report showed U.S. consumer prices in November increased by the most in seven months, though broadly in line with market expectations.
Benchmark S&P 500 index and Nasdaq were higher while the Dow retreated from early gains in choppy trading. Five of the 11 major S&P 500 sectors advanced, led by gains in communication services, technology and consumer discretionary services. Healthcare and utilities stocks were the biggest losers.
“Nasdaq is rallying on the prospect of a rate cut next week and has room to move higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
The Dow Jones Industrial Average fell 4.93 points, or 0.01%, to 44,242.90, the S&P 500 rose 51.89 points, or 0.86%, to 6,086.80 and the Nasdaq Composite rose 341.80 points, or 1.74%, to 20,029.04.
Markets are pricing in more than a 96% chance the Fed will cut rates by 25 basis points next week, up from an 86% chance before the data, according to CME’s FedWatch Tool. Bets had risen following Friday’s employment report, which showed an uptick in unemployment alongside a surge in job growth.
The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.273%.
“The equity market seems to be breathing a sigh of relief that this is another steady-as-she-goes report,” said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. “There’s no surprises. It seems the equity market was braced for a higher than expected number.”
Tesla shares climbed nearly 4% to a record high as the electric vehicle maker extended a rally in the wake of the U.S. presidential election.
Nvidia and other megacap growth stocks, including Alphabet and Amazon were also trading higher, adding between 0.2% and 4.6%.
Pharmacy benefit managers, including Cigna, CVS Health, and UnitedHealth Group, lost ground after a bipartisan group of lawmakers introduced a bill that would force health insurers or drug middlemen to divest their pharmacy businesses.
GameStop gained 8% after the videogame retailer reported a profit for the third quarter on cost-saving efforts.
Broadcom jumped 5.7% following a report that Apple is working with the company to develop its first server chip specially designed for artificial intelligence.
Macy’s shed 2.2% after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.
Advancing issues outnumbered decliners by a 1.53-to-1 ratio on the NYSE. On the Nasdaq, 2,405 stocks rose and 1,857 fell as advancing issues outnumbered decliners by a 1.3-to-1 ratio.
The S&P 500 posted 21 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 102 new highs and 103 new lows.
At 1:47 p.m. EST, the Dow Jones Industrial Average fell 85.08 points, or 0.19%, to 44,557.44, the S&P 500 lost 20.07 points, or 0.33%, to 6,070.20 and the Nasdaq Composite lost 47.70 points, or 0.24%, to 19,809.92.
Eight out of 11 S&P 500 sectors lost ground, led by declines in consumer discretionary stocks.
Comcast slid 9.2% after forecasting a loss of more than 100,000 broadband subscribers in the fourth quarter, dragging down the communication services sector by 1.0%.
Hershey surged 12.6% to lead S&P 500 gainers, following a report that Cadbury parent Mondelez was exploring an acquisition of the chocolate maker. Mondelez shares fell 1.3%.
Investors are anticipating the consumer price index (CPI) data set for release on Wednesday, along with the producer price index (PPI) on Thursday, ahead of the Federal Reserve’s meeting on Dec. 17-18.
Bets of a 25-basis-point rate cut at the upcoming meeting shot up to more than 85% after data on Friday showed a rise in the unemployment rate to 4.2% in November, indicating an easing labor market.
Several Fed officials, including Chair Jerome Powell, emphasized caution regarding the central bank’s approach to easing monetary policy due to the economy’s resilience.
Wall Street’s main indexes started December on a positive note, with the benchmark S&P 500 and the tech-heavy Nasdaq both gaining in their first week, while the blue-chip Dow ended the week slightly lower.
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