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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 4:00 p.m. ET/ 2000 GMT)

By Chuck Mikolajczak

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

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

a closing record, paced by gains in drugmaker Merck ( MRK ), while

investors looked towards the next piece of inflation data and

Federal Reserve policymaker commentary for signals on the rate

path.

Merck & Co ( MRK ) advanced 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 sits roughly 1% away from breaking the

40,000 level for the first time.

Gains on the tech-heavy Nasdaq were capped by 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.

According to preliminary data, the S&P 500

gained 45.68 points, or 0.88%, to end at 5,249.26 points,

while the Nasdaq Composite gained 83.82 points, or

0.51%, to 16,399.52. The Dow Jones Industrial Average

rose 484.20 points, or 1.23%, to 39,766.53.

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.

Rate sensitive utilities and real estate

were the best performers among the 11 major S&P sectors, getting

a lift as bond yields eased.

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

jumped a day after its stellar Nasdaq debut.

GameStop ( GME ) plunged after the videogame retailer

reported lower fourth-quarter revenue and said it had cut an

unspecified number of jobs to reduce costs.