Updates to 2:20 PM ET

By Chibuike Oguh, Purvi Agarwal and Shashwat Chauhan

NEW YORK, Dec 11 (Reuters) - Wall Street stocks jumped on Wednesday as a rally in tech stocks boosted 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.

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.

Benchmark S&P 500 index and Nasdaq were higher while the Dow retreated from early gains in choppy trading. Five of the 11 major S&P 500 sectors advanced, led by gains in communication services, technology and consumer discretionary services. Healthcare and utilities stocks were the biggest losers.

"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.

The Dow Jones Industrial Average .DJI fell 4.93 points, or 0.01%, to 44,242.90, the S&P 500 .SPX rose 51.89 points, or 0.86%, to 6,086.80 and the Nasdaq Composite .IXIC rose 341.80 points, or 1.74%, to 20,029.04.

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 US10YT=RR rose 5.2 basis points to 4.273%.

"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 TSLA.O shares climbed nearly 4% to a record high as the electric vehicle maker extended a rally in the wake of the U.S. presidential election.

Nvidia NVDA.O and other megacap growth stocks, including Alphabet GOOGL.O and Amazon AMZN.O were also trading higher, adding between 0.2% and 4.6%.

Pharmacy benefit managers, including Cigna CI.N, CVS Health CVS.N, and UnitedHealth Group UNH.N, 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 GME.N gained 8% after the videogame retailer reported a profit for the third quarter on cost-saving efforts.

Broadcom AVGO.O jumped 5.7% following a report that Apple AAPL.O is working with the company to develop its first server chip specially designed for artificial intelligence.

Macy's M.N shed 2.2% after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.

Advancing issues outnumbered decliners by a 1.53-to-1 ratio on the NYSE. On the Nasdaq, 2,405 stocks rose and 1,857 fell as advancing issues outnumbered decliners by a 1.3-to-1 ratio.

The S&P 500 posted 21 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 102 new highs and 103 new lows.

(Reporting by Purvi Agarwal and Shashwat Chauhan in Bengaluru; Editing by Anil D'Silva, Maju Samuel and David Gregorio)

((Purvi.Agarwal@thomsonreuters.com; Shashwat.Chauhan@thomsonreuters.com))