By yourNEWS Media Newsroom
NEW YORK — U.S. stocks rebounded sharply Thursday, snapping a three-week slump as a tame inflation report bolstered expectations for Federal Reserve interest rate cuts in 2026, while a stunning forecast from chipmaker Micron Technology underscored surging demand for artificial intelligence.
The Consumer Price Index (CPI) report revealed consumer prices rose less than anticipated in the year through November, though the Labor Department’s Bureau of Labor Statistics withheld month-to-month data due to the 43-day government shutdown, which disrupted October’s data collection. The report eased concerns about persistent inflation, prompting investors to price in a higher likelihood of monetary easing.
“The constructive CPI report starts to ease pressure on policymakers, potentially making them more comfortable cutting rates next year,” said Bill Merz, head of capital markets research at U.S. Bank’s Asset Management Group. “We’ll need to see follow-through next month to confirm there wasn’t too much noise from the shutdown.”
The S&P 500 climbed 52.48 points (0.78%) to 6,773.91, while the tech-heavy Nasdaq Composite surged 311.60 points (1.37%) to 23,004.92, led by semiconductor and AI-related stocks. The Dow Jones Industrial Average added 69.36 points (0.14%) to 47,955.33. The Russell 2000, which tracks small-cap stocks sensitive to interest rate shifts, also advanced.
Traders now assign a 58% probability to a Fed rate cut in March, according to CME’s FedWatch Tool, up from earlier estimates.
The rally was broad-based, with consumer discretionary stocks gaining ground after reports that activist investor Elliott Management acquired a $1 billion stake in Lululemon, sending the athletic-wear company’s shares soaring. Starbucks also rallied.
Micron Technology stole the spotlight after forecasting quarterly profits nearly double analysts’ expectations, citing robust demand for AI-driven memory chips. The announcement propelled shares of Micron and peers like SanDisk and Western Digital higher, while the Philadelphia SE Semiconductor Index climbed.
Despite the optimism, analysts cautioned that corporate debt-fueled spending on AI development—coupled with uncertainty over monetization—has dampened risk appetite this quarter. Oracle recovered from a Wednesday selloff triggered by concerns over funding plans for its Stargate data center.
Meanwhile, Trump Media & Technology shares jumped after the company announced an all-stock merger with fusion power firm TAE Technologies, valuing the deal at over $6 billion.
A separate report showed jobless claims fell last week, reversing the prior week’s spike and signaling stability in the labor market. Earlier this week, the government reported U.S. job growth rebounded in November, though the unemployment rate ticked up to 4.6%.
The day’s gains reflected a confluence of factors: cooling inflation, resilient labor data, and surging tech optimism. Yet, with Fed policy still in flux and AI investments under scrutiny, investors remain cautious about the durability of the rally.
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