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 (NASDAQ:TSLA) shares climbed to a record high as the electric vehicle maker extended a rally in the wake of the U.S. presidential election.

Nvidia (NASDAQ:NVDA) and other megacap growth stocks, including Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), also finished higher.

Pharmacy benefit managers, including Cigna (NYSE:CI), CVS Health (NYSE:CVS), and UnitedHealth Group (NYSE: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 (NYSE:GME) gained after the videogame retailer reported a profit for the third quarter on cost-saving efforts.

Broadcom (NASDAQ:AVGO) jumped following a report that Apple (NASDAQ:AAPL) is working with the company to develop its first server chip specially designed for artificial intelligence.

Macy's (NYSE:M) shed after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.