NEW YORK: The S&P 500 and the Nasdaq climbed on Wednesday after the latest inflation data bolstered bets on the Federal Reserve cutting interest rates later this month, while the Dow was pressured by declines in UnitedHealth.
A Labor Department report showed US consumer prices increased by the most in seven months in November, though broadly in line with market expectations.
“There were some fears that you could have had an upside surprise to inflation and that may have made the Fed rethink cutting next week,” said Tom Bruce, macro investment strategist, Tanglewood Total Wealth Management.
“With it coming in line with expectations, it clears a way for a 25 bps cut in next week’s meeting.” Bets on the Fed cutting 25 basis point cut next week jumped to over 96%, compared with 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.
Also expected this week is a producer prices reading on Thursday.
Yields on US government bonds were choppy ahead of an auction of 10-year notes worth $39 billion later in the day. It was last at 4.2458%.
At 11:26 a.m. ET, the Dow Jones Industrial Average fell 9.26 points, or 0.02%, to 44,238.61, the S&P 500 gained 46.31 points, or 0.77%, to 6,081.22 and the Nasdaq Composite gained 291.54 points, or 1.48%, to 19,978.78.
Eight of the 11 major S&P sub-sectors were trading higher, with consumer discretionary rising 1.6%, while communication services added 2.2%.
Most megacap and growth stocks were higher, with Alphabet up 3.3% and Tesla gaining 3.2%.
On the flip side, the blue-chip Dow was weighed down by a 5.2% decline in UnitedHealth.
Despite running into some turbulence earlier this week, both the S&P 500 and the Nasdaq are hovering near their all-time highs, as investors bought into heavyweight technology stocks all through the year in a bid to catch up with the artificial intelligence hype.
Another tailwind for equities was former President Donald Trump’s victory in the presidential election in November, as analysts believe his policies on lower corporate taxes and eased regulation could boost corporate performance.
Among other movers, GameStop gained 8.8% 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 developing its first server chip specially designed for artificial intelligence with the company.
Macy’s slumped 5.6% after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.
Match Group dipped 6.4% as it said it would report fourth-quarter revenue below its previous forecast due to a larger-than-anticipated impact from currency exchange rates.
Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE and by a 1.01-to-1 ratio on the Nasdaq.
The S&P 500 posted 20 new 52-week highs and six new lows, while the Nasdaq Composite recorded 74 new highs and 83 new lows.
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