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Merck ( MRK ) up after U.S. FDA approves therapy for rare lung

condition

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Trump's media firm extends gains after stellar debut

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GameStop ( GME ) faces 'unsustainable' sales decline, shares slide

(Updated at 4:11 p.m. ET/ 2011 GMT)

By Chuck Mikolajczak

NEW YORK, March 27 (Reuters) - U.S. stocks were higher

on Wednesday, with the Dow leading gains and the S&P 500 setting

a closing record, paced drugmaker Merck ( MRK ), while investors looked

towards the next piece of inflation data and Federal Reserve

commentary for signals on the rate path.

Merck & Co ( MRK ) advanced 4.96% as the best performer on

the Dow after the U.S. Food and Drug Administration approved its

therapy for adults suffering from a rare lung condition.

The blue-chip Dow now sits less than 1% away from breaking

the 40,000 level for the first time.

Gains on the tech-heavy Nasdaq were held in check, however,

by 2.5% decline in AI giant Nvidia ( NVDA ), which lost ground

for a second straight session. Shares were still up more than

80% on the year, however.

Recent data that showed hotter than expected inflation in

the form of consumer prices (CPI) and producer prices (PPI)

failed to markedly disrupt market expectations for a rate cut of

at least 25 basis points (bps) from the Federal Reserve in June.

The Fed kept its projections for three rate cuts this year

intact at its policy meeting last week, which central bank

officials have largely stood by this week in comments.

The Personal Consumption Expenditures Price Index (PCE), the

Fed's preferred inflation gauge, is due on Good Friday, when the

U.S. stock market will be closed.

"The Fed can and should take its time, largely because the

economy is affording them that flexibility with the strength

that we're seeing, and that premature rate cuts only probably

set us up for a more adverse outcome," said Craig Fehr, head of

investment strategy at Edward Jones in St. Louis.

"The real challenge for Fed officials has been massaging and

guiding market expectations when they swing too far in one

direction or another."

Later in the day, Fed Board Governor Christopher Waller is

expected to speak at the Economic Club of New York later in the

day.

The Dow Jones Industrial Average rose 477.75 points,

or 1.22% , to 39,760.08, the S&P 500 gained 44.91 points,

or 0.86%, to 5,248.49 and the Nasdaq Composite gained

83.82 points, or 0.51%, to 16,399.52.

The gains marked the biggest daily percentage advance for

the Dow since Dec. 13.

All three major U.S. stock indexes were poised for quarterly

gains, with the S&P on track for its biggest first quarter

percentage gain since 2019.

Traders see a 70.4% chance the Fed will begin its easing

cycle in June, according to the CME FedWatch Tool.

Each of the 11 major S&P sectors were higher, with rate

sensitive utilities and real estate were the

best performers, climbing 2.75% and 2.42%, respectively, getting

a lift as bond yields eased.

Among individual stocks, Trump Media & Technology Group ( DJT )

jumped 14.19% a day after its stellar Nasdaq debut.

On the down side, GameStop ( GME ), plunged 15.03% after the

videogame retailer reported lower fourth-quarter revenue and

said it had cut an unspecified number of jobs to reduce costs.

Advancing issues outnumbered decliners by a 4.5-to-1 ratio

on the NYSE. On the Nasdaq, advancing issues outnumbered

decliners by a 2.68-to-1 ratio.

The S&P 500 posted 62 new 52-week highs and no new lows

while the Nasdaq recorded 184 new highs and 79 new lows.

Volume on U.S. exchanges was 10.65 billion shares, compared

with the 12.2 billion average for the full session over the last

20 trading days. Activity is expected to lighten ahead of the

Friday holiday.