NEW YORK (AP) — Drops for Eli Lilly and other influential companies are weighing on U.S. indexes Tuesday, even though most of the market is rising following an encouraging update on inflation.
The S&P 500 was down 0.3% in midday trading, despite gains for the majority of stocks in the index. The Dow Jones Industrial Average was down 76 points, or 0.2%, as of 11:45 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.
Stocks initially rose in the morning after a report showed 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 updates 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 inched up to 4.79% 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 4.37% from 4.39%.
On Wall Street, KB Home rose 3% after delivering a better profit for its latest quarter than analysts expected. The rise in Treasury yields has made mortgages more expensive, but CEO Jeffrey Mezger said buyers nevertheless “continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.”
Mezger said faster build times helped the company deliver more homes in the three months through November.
H&E Equipment Services more than doubled to top $90 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 3.4%.
Even though the majority of stocks were climbing, a 1.8% drop for Nvidia and other highly influential Big Tech stocks reined in indexes’ gains.
