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S&P 500, Nasdaq gain; Dow drops

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Tesla shares hit record high

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Healthcare stocks tank after bipartisan bill

(Updates to 4 PM ET)

By Chibuike Oguh, Purvi Agarwal and Shashwat Chauhan

NEW YORK, Dec 11 (Reuters) -

Wall Street's benchmark S&P 500 index rose on Wednesday and

a rally in tech stocks lifted the Nasdaq above the 20,000-point

milestone for the first time, after a U.S. inflation report

boosted expectations of a Federal Reserve interest rate cut.

The Dow Jones Industrial Average dipped, dragged by health

insurers as U.S. lawmakers introduced a bill seen as crimping

their profits.

A Labor Department report showed U.S. consumer prices in

November increased by the most in seven months, though broadly

in line with market expectations.

According to preliminary data, the S&P 500

gained 49.21 points, or 0.82%, to end at 6,084.12 points,

while the Nasdaq Composite gained 347.66 points, or

1.77%, to 20,034.90. The Dow Jones Industrial Average

fell 94.48 points, or 0.21%, to 44,153.35.

"Nasdaq is rallying on the prospect of a rate cut next week

and has room to move higher," said Peter Cardillo, chief market

economist at Spartan Capital Securities.

Markets are pricing in more than a 96% chance the Fed will

cut rates by 25 basis points next week, up from an 86% chance

before the data, according to CME's FedWatch Tool. Bets had

risen following Friday's employment report, which showed an

uptick in unemployment alongside a surge in job growth.

The yield on benchmark U.S. 10-year notes rose

5.2 basis points to 4.267%.

"The equity market seems to be breathing a sigh of relief

that this is another steady-as-she-goes report," said Wasif

Latif, chief investment officer at Sarmaya Partners in New

Jersey. "There's no surprises. It seems the equity market was

braced for a higher than expected number."

Tesla shares climbed to a record high as the

electric vehicle maker extended a rally in the wake of the U.S.

presidential election.

Nvidia ( NVDA ) and other megacap growth stocks, including

Alphabet and Amazon ( AMZN ), also finished higher.

Pharmacy benefit managers, including Cigna ( CI ), CVS

Health ( CVS ), and UnitedHealth Group ( UNH ), lost ground

after a bipartisan group of lawmakers introduced a bill that

would force health insurers or drug middlemen to divest their

pharmacy businesses.

GameStop ( GME ) gained after the videogame retailer

reported a profit for the third quarter on cost-saving efforts.

Broadcom ( AVGO ) jumped following a report that Apple ( AAPL )

is working with the company to develop its first server

chip specially designed for artificial intelligence.

Macy's shed after the department-store bellwether cut

its annual profit forecast as persistent weakness in demand

clouded its expectations for the holiday shopping season.