By Chibuike Oguh, Purvi Agarwal and Shashwat Chauhan

NEW YORK (Reuters) -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.

Five of the 11 major S&P 500 sectors advanced, led by gains in communication services, technology and consumer discretionary services.

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.

The Dow Jones Industrial Average fell 99.27 points, or 0.22%, to 44,148.56, the S&P 500 gained 49.28 points, or 0.82%, to 6,084.19 and the Nasdaq Composite gained 347.65 points, or 1.77%, to 20,034.89.

"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 4.271%.

"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 shares climbed nearly 6% to a record high as the electric vehicle maker extended a rally in the wake of the U.S. presidential election.

Nvidia and other megacap growth stocks, including Alphabet and Amazon, also finished higher, adding between 1.2% and 5.5%. Apple edged down 0.5%

Pharmacy benefit managers, including Cigna, CVS Health, and UnitedHealth Group, 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 gained 7.5% after the videogame retailer reported a profit for the third quarter on cost-saving efforts.

Broadcom jumped 6.6% following a report that Apple is working with the company to develop its first server chip specially designed for artificial intelligence.