Feb 9 (Reuters) - Big gains in megacap stocks such as Nvidia pushed the benchmark S&P 500 above the 5,000 mark for a second day on Friday, after modest revisions to 2023 inflation figures supported assumptions that the Federal Reserve will cut interest rates this year.
Nvidia (NVDA.O), opens new tab climbed 2.8% to a record high after Reuters reported the company was building a new business unit focused on designing bespoke chips for cloud computing firms and others, including advanced artificial intelligence (AI) processors.
Other megacaps including Microsoft (MSFT.O), opens new tab, Amazon.com (AMZN.O), opens new tab and Alphabet (GOOGL.O), opens new tab rose more than 1% each.
The S&P 500 notched up nine closing record highs this year, driven by positive earnings and optimism around AI that has boosted shares of chipmakers and other technology-related companies.
Data showed U.S. monthly consumer prices rose less than initially estimated in December, but underlying inflation remained a tad warm - a mixed picture that clouded expectations on the timing of interest-rate cuts from the Fed this year.
"The revision to the CPI data from last year was benign in its delivery. So that was a further catalyst for stock prices once again bidding on the prospects of the Fed lowering interest rates later this year," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
Strong economic data and hawkish comments from Fed policymakers in recent weeks have pushed back traders' bets that the U.S. central bank will start cutting interest rates in March.
Traders have priced in nearly 18% odds of the Fed cutting interest rates in March, down from 61% a month ago, according to the CMEGroup's Fedwatch tool. They see a 51% chance of a 25-basis-point rate cut in May.
Market participants are awaiting data on January consumer prices next week for more clues on when the Fed will cut borrowing costs.
At 12:13 p.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was down 131.27 points, or 0.34%, at 38,595.06, the S&P 500 (.SPX), opens new tab was up 13.31 points, or 0.27%, at 5,011.22, and the Nasdaq Composite (.IXIC), opens new tab was up 141.92 points, or 0.90%, at 15,935.63.
The three main indexes were set for their fifth consecutive week of gains as upbeat earnings offset uncertainty around the interest-rate path and concerns about U.S. regional banks' exposure to commercial real estate.
With the U.S. earnings season past the halfway mark, more than 80% of S&P 500 companies topped profit estimates in the fourth quarter, according to LSEG data. In a typical quarter, 67% of companies beat estimates.
PepsiCo (PEP.O), opens new tab lost 2.7% after its fourth-quarter revenue fell short of estimates as multiple price increases crimped demand for its juices and Lay's crisps.
Pinterest (PINS.N), opens new tab plunged 12.1% after it forecast first-quarter revenue largely below Wall Street estimates, while Cloudflare (NET.N), opens new tab rallied 20.1% as it forecast upbeat first-quarter revenue and profit.
Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq.
The S&P index recorded 40 new 52-week highs and three new lows, while the Nasdaq recorded 124 new highs and 52 new lows.
Reporting by Sruthi Shankar and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta
