Stocks rise as inflation report keeps rate hikes on track

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Stocks eased off of early gains, but still edged higher in midday trading on Wall Street Wednesday after the latest report of surging prices appeared to keep the Federal Reserve on track to raise interest rates later this year.

The S&P 500 rose 0.3% as of 11:34 a.m. Eastern. The Dow Jones Industrial Average rose 54 points, or 0.2%, to 36,304 and the Nasdaq rose 0.3%.

The gains were led by technology stocks, which have been choppy as investors shift money in anticipation of higher interest rates that tend to make the pricey sector less attractive. Microsoft rose 1.5% and chipmaker Nvidia rose 0.6%.

A mix of retailers and other companies that rely on direct consumer spending, such as auto companies, also made solid gains. Lowe’s rose 1.1%.

Health care companies fell. Biogen slumped 8% on news that Medicare is limiting coverage of the biopharmaceutical company’s $28,000-a-year Alzheimer’s drug whose benefits have been widely questioned.

Bond yields were mostly stable. The yield on the 10-year Treasury fell to 1.73% from 1.74% late Tuesday.

The central bank is trimming bond purchases that helped keep interest rates low throughout the virus pandemic. Investors are closely watching to see just how soon the Fed will start raising interest rates in an attempt to fight inflation. The market now puts the chances of the Fed raising short-term rates by at least a quarter point in March at around 75%. A month ago, it was about 36%.

Wall Street will get another update on rising inflation on Thursday, when the Labor Department releases December results from an index based on U.S. wholesale prices, which shows how inflation is affecting costs for businesses.

Businesses in a wide range of industries have been passing higher costs off to consumers, but many have been warning that they will still feel a financial impact because of higher prices and supply chain problems. Medical products maker Cardinal Health was the latest to issue such a warning earlier this week.

Wall Street will be closely watching the latest round of earnings to see how companies are dealing with inflation. Several airlines and banks this week will be among the first big companies to report their latest financial results.

Delta Air Lines reports its results on Thursday. Citigroup, JPMorgan Chase and Wells Fargo report results on Friday.

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