Wall Street’s S&P 500 index climbed on Wednesday, while a tech rally propelled the Nasdaq Composite above the 20,000-point milestone for the first time.
A U.S. inflation report bolstered hopes for a Federal Reserve interest rate cut, fueling market optimism.
Meanwhile, the Dow Jones Industrial Average dipped, weighed down by health insurers after lawmakers introduced a bill expected to impact their profits.
Of the 11 major S&P 500 sectors, five advanced, with communication services, technology, and consumer discretionary leading the gains.
A Labor Department report revealed U.S. consumer prices in November rose at the fastest pace in seven months, though the increase aligned with market expectations.
The Dow Jones Industrial Average dropped 99.27 points, or 0.22%, to 44,148.56.
The S&P 500 gained 49.28 points, or 0.82%, to 6,084.19, while the Nasdaq Composite surged 347.65 points, or 1.77%, to close at 20,034.89.
“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.
Markets now anticipate more than a 96% probability that the Fed will cut rates by 25 basis points next week, up from 86% before the inflation data, according to CME’s FedWatch Tool.
The optimism had been rising since Friday’s employment report, which showed an uptick in unemployment alongside strong job growth.
The yield on U.S. 10-year Treasury notes increased by 5.2 basis points to 4.271%.
“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.”