(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

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US producer prices rise moderately in December

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Applied Digital ( APLD ) jumps after report of Macquarie's

investment

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Eli Lilly ( LLY ) falls after weak sales forecast for weight-loss

drug

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Indexes up: Dow 0.31%, S&P 500 0.37%, Nasdaq 0.64%

(Updates to after markets open)

By Johann M Cherian and Sukriti Gupta

Jan 14 (Reuters) -

Wall Street's main indexes rose on Tuesday, as investors

took comfort from a softer-than-expected producer inflation

report and weighed what it could mean for the Federal Reserve's

monetary policy trajectory this year.

A

Labor Department report

showed the producer price index rose 3.3% on an annual

basis in December 2024, compared with the 3.4% rise economists

polled by Reuters had expected. On a monthly basis, the index

rose 0.2%.

The yield on the benchmark 10-year Treasury note

eased marginally, but at 4.79%, it remained close

to its 14-month high, keeping a lid on equity gains.

Some megacaps rose, with Nvidia ( NVDA ) climbing 1.2%

and Amazon.com ( AMZN ) adding 1.4%. Eight of the 11 S&P 500

sectors gained, led by consumer discretionary's 1.4%

rise, as Tesla jumped about 4%.

Traders now see the Fed delivering 29.4 basis points

worth of rate cuts by the end of the year, according to data

compiled by LSEG - lower than the 50-bps reduction the central

bank had forecast for this year.

"It was a positive report for the overall equity market

and for the bond market," said Robert Pavlik, senior portfolio

manager at Dakota Wealth.

However, the increase in gasoline and food prices was a

little disconcerting, according to Pavlik.

The consumer price index report, expected on Wednesday,

will now be closely watched.

At 09:50 a.m. ET, the Dow Jones Industrial Average

rose 131.20 points, or 0.31%, to 42,428.32, the S&P 500

gained 21.84 points, or 0.37%, to 5,858.06, and the

Nasdaq Composite gained 122.50 points, or 0.64%, to

19,209.39.

The domestically focused small-cap Russell 2000 index

rose 1%.

Quarterly reports from big banks are also highly

anticipated later this week, with the lenders expected to report

stronger earnings, fueled by robust dealmaking and trading. An

index tracking banks rose 0.5%.

Markets also weighed a report which said that

President-elect Donald Trump's incoming administration was

considering gradual tariff hikes, including a plan that could

increase import duties by 2% to 5% a month.

Comments from Kansas City Fed President Jeffrey Schmid and

New York Fed President John Williams, who are voting members on

the Federal Open Market Committee, are expected later in the

day.

Wall Street's main indexes have witnessed a downward trend

since early December, with the price-weighted Dow down

more than 5% from the record high it hit last month, and the

benchmark S&P 500 not far from a two-month low.

The central bank's cautious stance on monetary policy easing

this year, along with subsequent batches of upbeat economic

data, raised investor concerns that U.S. inflation could be

running high.

Trump is expected to take office on Jan. 20 and his policy

proposals on tariffs and immigration are widely anticipated to

fuel inflation.

Applied Digital ( APLD ) jumped 16% after a report said

Macquarie would take a 15% stake in it and also invest

up to $5 billion in the company's AI data centers.

Eli Lilly ( LLY ) slid 8.2% after saying it expects

sales of a popular weight-loss drug and related diabetes

treatment to miss estimates in the fourth quarter. The

healthcare sector lost 1.3%.

Advancing issues outnumbered decliners by a 3.46-to-1

ratio on the NYSE, and by a 2.23-to-1 ratio on the Nasdaq.

The S&P 500 posted six new 52-week highs and one new

low, while the Nasdaq Composite recorded 27 new highs and 41 new

lows.