Stock market today: Wall Street ticks higher after encouraging inflation data

NEW YORK — U.S. stocks are ticking higher Tuesday following an encouraging update on inflation.

The S&P 500 was 0.5% higher in early trading. The Dow Jones Industrial Average was up 164 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Stocks rose after a report showed 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 price registers and auto lots in December.

Stubbornly high readings on inflation and a run of better-than-expected readings 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. But speculation is growing about whether the Fed may not cut rates at all this year.

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

The yield on the 10-year Treasury was holding 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 jumped 9.5% after delivering a better profit and revenue for its latest quarter than analysts expected. CEO Jeffrey Mezger said faster build times helped it deliver more homes in the three months through November.

The rise in Treasury yields has made mortgages more expensive, but Mezger said buyers nevertheless ''continued to demonstrate a desire for homeownership and housing market conditions improved relative to last year.''

On the losing end of the market was Signet Jewelers, which tumbled 16.5%. The diamond seller said its sales in the peak shopping days leading up to Christmas this 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 even 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.

In stock markets abroad, indexes were mixed across Europe and Asia.

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 slipped 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 fell 0.4% to $76.96 per barrel. Brent crude, the international standard, eased 0.7% to $80.44 per barrel.

___

AP Business Writers Yuri Kageyama and Matt Ott contributed.