By Shristi Achar A and Johann M Cherian
(Reuters) - Wall Street's main indexes edged higher on Tuesday, following inflation data that kept expectations of a rate cut in May intact, while investors awaited the Federal Reserve's policy decision later in the week.
November Consumer Price Index (CPI) rose 3.1% on an annual basis, in line with estimates from economists polled by Reuters. Core prices, excluding volatile items such as food and energy costs, also matched expectations, rising 4% annually.
On a month-on-month basis, consumer prices rose 0.1% last month, compared with estimates of it remaining unchanged.
Traders pared earlier bets that the Fed could start interest rate cuts as soon as March and are now expecting the U.S. central bank's May meeting as the likeliest start for rate reductions.
Bets of at least a 25-basis point rate cut in March went down to 43.7%, from about 50% before the data, according to the CME Group's (NASDAQ:CME) FedWatch tool.
"They've (Fed) already taken rates up a lot...they will keep rates up in that range for longer than what the market is currently expecting," said Jason Pride, chief of investment strategy and research at Glenmede, adding that markets do not expect more hikes and are instead focused on rate cuts.
"It sets the equity markets up for a little bit more difficult of a time on a near term horizon."
All eyes are now on the Fed's interest rate verdict at the end of its two-day meeting on Wednesday, as well as the producer price index (PPI) data for November.
The European Central Bank and the Bank of England are also scheduled to deliver their policy verdicts later this week.
Oracle (NYSE:ORCL) fell 11.1% as the cloud services provider forecast third-quarter revenue below estimates on slowing demand for its cloud service.
The energy sector was a laggard, shedding 1.4% as crude prices slid over 3%. [O/R]
Google-parent Alphabet (NASDAQ:GOOGL) lost 0.8%, after "Fortnite" maker Epic Games prevailed in its high-profile antitrust trial over the company.
Other growth stocks were mixed, with Tesla (NASDAQ:TSLA) down 1.8%, while Meta Platforms gained 1.2%.
Chipmaker Broadcom (NASDAQ:AVGO)'s shares also boosted the benchmark index, adding 3.5% and hitting a fresh record-high level.
At 11:43 a.m. ET, the Dow Jones Industrial Average was up 116.21 points, or 0.32%, at 36,521.14, the S&P 500 was up 5.53 points, or 0.12%, at 4,627.97, and the Nasdaq Composite was up 30.94 points, or 0.21%, at 14,463.42.
Among other movers, Lucid was down 9.4% after the electric-vehicle maker's CFO Sherry House stepped down.
Airbnb (NASDAQ:ABNB) fell 2.0% as Barclays (LON:BARC) downgraded the rental firm's shares to "underweight" from "equal weight".
Declining issues outnumbered advancers for a 1.33-to-1 ratio on the NYSE and for a 1.46-to-1 ratio on the Nasdaq.
The S&P index recorded 63 new 52-week highs and one new low, while the Nasdaq recorded 81 new highs and 108 new lows.