Stock market today: Wall Street mostly rises after encouraging inflation data despite Lilly's drag

NEW YORK (AP) — Most U.S. stocks rose Tuesday following an encouraging update on inflation, though drops for Eli Lilly and other influential stocks kept indexes in check.

The S&P 500 rose 0.1% as three out of every four stocks in the index climbed. The Dow Jones Industrial Average added 221 points, or 0.5%, and the Nasdaq composite slipped 0.2%.

Stocks got a boost from a report showing inflation at the U.S. wholesale level wasn’t as high last month as economists expected. It’s an encouraging signal ahead of a report coming Wednesday, which will show how much inflation U.S. consumers faced at gasoline pumps, grocery registers and auto lots in December.

Stubbornly high readings on inflation and a run of better-than-expected updates on the U.S. economy have sent Wall Street into a weekslong rut, pulling it further from the dozens of all-time highs set last year. The fear is that all the strong data will convince the Federal Reserve to deliver less relief this year through lower interest rates.

The Fed has already hinted it’s likely to cut rates just two times in 2025, down from an earlier projection of four. Speculation is growing about whether the Fed may cut rates zero times this year.

Such questions have sent Treasury yields sharply higher in the bond market, which cranks up the pressure on the stock market. Yields slowed their ascent following the update on wholesale inflation.

The yield on the 10-year Treasury held at 4.78%, where it was late Monday. It was below 3.65% in September.

The two-year Treasury yield, which more closely tracks expectations for Fed action, eased to 4.36% from 4.39%.

On Wall Street, KB Home rose 4.8% after delivering a better profit for its latest quarter than analysts expected. The rise in Treasury yields has made mortgages more expensive, but CEO Jeffrey Mezger said buyers nevertheless “continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.”

Mezger said faster build times helped the company deliver more homes in the three months through November.

H&E Equipment Services more than doubled to top $90 after United Rentals said it will buy its smaller rival for $92 per share in cash. The deal values H&E, which rents aerial work platforms, earthmoving equipment and other products, at $4.8 billion, including roughly $1.4 billion of net debt.

United Rentals rose 5.9%.

Indexes drifted between gains and losses through the day in large part due to drops for several Big Tech stocks. Nvidia fell 1.1% and was the second-heaviest weight on the S&P 500.

The only stock to drag more on the market was Eli Lilly, which fell 6.6% after saying it expects to report weaker revenue for the last three months of 2024 than previously forecast.

CEO David Ricks said last quarter’s 45% growth in Lilly’s revenue for its Mounjaro diabetes treatment, Zepbound obesity injections and other products in the incretin market wasn’t as big as expected.

Also on the losing end of the market was Signet Jewelers, which tumbled 21.7%. The diamond seller said its sales in the peak shopping days leading up to Christmas this past holiday season were below its forecasts. Shoppers were focusing on lower-priced fashion gifts “even more than anticipated in a continued competitive environment,” said Joan Hilson, chief financial and operating officer.

Several of the nation’s biggest financial companies will report their latest results on Wednesday, including JPMorgan Chase and Wells Fargo, as earnings reporting season gears up. Such reports are always under the spotlight, but companies may be under more pressure to impress this time around.

If Treasury yields continue to rise, either stock prices need to fall or companies need to produce bigger profit growth to make up for it.

All told Tuesday, the S&P 500 rose 6.69 points to 5,842.91. The Dow Jones Industrial Average gained 221.16 to 42,518.28, and the Nasdaq composite slipped 43.71 to 19,044.39.

In stock markets abroad, indexes were higher across much of Europe and Asia with a few exceptions.

Japan’s Nikkei 225 index fell 1.8% following a holiday on Monday, but indexes were much stronger in China where stocks rose 1.8% in Hong Kong and 2.5% in Shanghai.

Crude oil prices fell to give back some of their strong gains in recent weeks, which had also been cranking up the pressure on inflation.

Benchmark U.S. crude eased 1.7% to $77.50 per barrel. Brent crude, the international standard, fell 1.3% to $79.92 per barrel.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.