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NEW YORK (AP) — Most U.S. stocks are rising on Tuesday following an encouraging update on inflation, but drops for Eli Lilly and some other influential companies are keeping indexes in check.
The S&P 500 was 0.1% higher in morning trading, with roughly 70% of the stocks in the index rising. The Dow Jones Industrial Average was up 134 points, or 0.3%, as of 10:50 a.m. Eastern time, and the Nasdaq composite was close to flat.
Stocks got a boost from a report showing inflation at the U.S. wholesale level wasn’t as high last month as economists expected. It’s an encouraging signal ahead of a report coming Wednesday, which will show how much inflation U.S. consumers faced at gasoline pumps, grocery price registers and auto lots in December.
Stubbornly high readings on inflation and a run of better-than-expected readings on the U.S. economy have sent Wall Street into a weekslong rut, pulling it further from the dozens of all-time highs set last year. The fear is that all the strong data will convince the Federal Reserve to deliver less relief this year through lower interest rates.
The Fed has already hinted it’s likely to cut rates just two times in 2025, down from an earlier projection of four. But speculation is growing about whether the Fed may not cut rates at all this year.
Such questions have sent Treasury yields sharply higher in the bond market, which cranks up the pressure on the stock market, but yields slowed their ascent following the update on wholesale inflation.
The yield on the 10-year Treasury ticked up to 4.80 from 4.78% late Monday after a couple oscillations in the morning. It was below 3.65% in September.
The two-year Treasury yield, which more closely tracks expectations for Fed action, edged down to 4.38% from 4.39%.
On Wall Street, KB Home rose 3.7% after delivering a better profit and revenue for its latest quarter than analysts expected. CEO Jeffrey Mezger said faster build times helped it deliver more homes in the three months through November.
The rise in Treasury yields has made mortgages more expensive, but Mezger said buyers nevertheless “continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.”
H&E Equipment Services's stock more than doubled to $90.41 after United Rentals said it will buy its smaller rival for $92 per share in cash. The deal values H&E, which rents aerial work platforms, earthmoving equipment and other products, at $4.8 billion, including roughly $1.4 billion of net debt.
United Rentals rose 4.1%.
Even though the majority of stocks were climbing, a 1% dip for Nvidia and other highly influential Big Tech stocks reined in indexes' gains.