Wall Street rallies on tame US inflation, Nasdaq jumps above 20,000

By Chibuike Oguh, Purvi Agarwal and Shashwat Chauhan

NEW YORK (Reuters) -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 (NASDAQ:TSLA ) 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 (NASDAQ:NVDA ) and other megacap growth stocks, including Alphabet (NASDAQ:GOOGL ) and Amazon (NASDAQ:AMZN ) were also trading higher, adding between 0.2% and 4.6%.

Pharmacy benefit managers, including Cigna (NYSE:CI ), CVS Health (NYSE:CVS ), and UnitedHealth Group (NYSE:UNH ), 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 (NYSE:GME ) gained 8% after the videogame retailer reported a profit for the third quarter on cost-saving efforts.

Broadcom (NASDAQ:AVGO ) jumped 5.7% following a report that Apple (NASDAQ:AAPL ) is working with the company to develop its first server chip specially designed for artificial intelligence.

Macy's (NYSE:M ) 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.

Source: Investing.com