Stocks near high ahead of inflation report

NEW YORK – Wall Street rose Wednesday as traders locked in their final moves ahead of a report on inflation, which could show whether all the excitement that’s vaulted stocks toward records is warranted.

The S&P 500 gained 0.6% to pull within 0.3% of its all-time high set two years ago. The Dow Jones Industrial Average added 0.5%, and the Nasdaq composite rose 0.8%.

Intuitive Surgical jumped 10.3% after the maker of robotic surgery systems said it expects to report stronger revenue for the end of 2023 than analysts expected. Homebuilder Lennar climbed 3.5% after it said it would send cash to shareholders by increasing its dividend and authorizing a repurchase of up to $5 billion of its own stock.

But the market’s focus is on Thursday, when the U.S. government will release its latest monthly update on inflation at the consumer level. A cool-down there from its peak in the summer of 2022 has raised hopes that the Federal Reserve may cut interest rates sharply this year. That in turn has sent Treasury yields easing in the bond market and stock prices rallying.

Economists expect Thursday’s report to show prices paid by U.S. consumers were 3.2% higher in December than a year earlier, according to FactSet. That would be a slight acceleration from November’s 3.1% inflation rate. But after ignoring the effects of food and fuel prices, which can quickly shift from month to month, economists believe underlying inflation trends likely continued to cool.

The Fed has hinted at possibly cutting interest rates three times this year. That would be a sharp turnaround after it jacked rates dramatically higher in hopes of slowing the economy and hurting investment prices enough to grind down high inflation.

But many traders are anticipating double that number of rate cuts. Critics say the Fed is unlikely to cut so many times unless a recession hits. If Thursday’s inflation data come in warmer than expected, it could upend those hopes and shake the market.

The yield on the 10-year Treasury has already slumped well below its perch above 5% in October on strong hopes for rate cuts. It edged a bit higher Wednesday, up to 4.03% from 4.02% late Tuesday.

On Wall Street, Boeing’s stock stabilized after slumping earlier in the week following the in-flight blowout of one of its planes flying for Alaska Airlines. It rose 0.9%.

The big companies in the S&P 500 are set to begin reporting their results for the last three months of 2023 on Friday. Delta Air Lines, JPMorgan Chase and UnitedHealth Group will be among that day’s headliners.

All told, the S&P 500 rose 26.95 points to 4,783.45. The Dow gained 170.57 to 37,695.73, and the Nasdaq climbed 111.94 to 14,969.65. The Russell 2000 index of smaller companies rose 2.23 points, or 0.1%, to 1,970.26.

Gold for February delivery fell $5.20 to $2,027.80 per ounce. Silver for March delivery fell 2 cents to $23.07 per ounce. March copper rose 2 cents to $3.78 per pound.

The dollar rose to 145.70 Japanese yen from 144.55 yen. The euro rose to $1.0970 from $1.0925.