The S&P 500 snapped a four-day slide on Thursday, boosted by lighter-than-expected inflation data that brightened the outlook for lower interest rates in 2026 and blowout guidance from chipmaker Micron Technology.
The broad market index jumped 0.79% to settle at 6,774.76, while the Nasdaq Composite advanced 1.38% to 23,006.36. The Dow Jones Industrial Average gained 65.88 points, or 0.14%, to end the day at 47,951.85.
The delayed November consumer price index report — the first since the U.S. government shutdown ended last month — showed headline annual inflation of 2.7%, according to the Bureau of Labor Statistics, below the 3.1% that economists polled by Dow Jones had expected. The 12-month rate for core CPI, which excludes food and energy, was 2.6%, was also lower than the Dow Jones forecast of 3%.
The report was pushed back from its original release date of Dec. 10. The BLS had canceled the release of the October inflation report in late November as a result of the longest-ever shutdown, meaning that Thursday's reading did not have all the usual data points of a standard CPI report.
Given the lack of October comparison data, economists might not place too much significance on this reading as the beginning of a downward trend in inflation, and some have even raised concerns around the calculations for housing inflation. Nonetheless, stocks extended their gains after the report, as initial jobless claims were below what economists had estimated as well.
"Those [owners' equivalent rent] numbers and everything were kind of back to almost pre-Covid levels in terms of the appreciation," David Waddell, CEO and chief investment strategist at Waddell & Associates, told CNBC. "Perhaps there'll be some adjustments, but I think at the moment, [the report] is saying inflation is under control."
During Thursday's session, Micron was a standout winner, jumping roughly 10% after the semiconductor play offered a strong revenue forecast for the current quarter. Micron helped rekindle the artificial intelligence trade, which has seen weakness in recent sessions.
"Micron's report was indicative of the fact that spending is going to be huge and continue to be huge going for the next 12-18 months," said Chris O'Keefe, lead portfolio manager at Logan Capital Management.
"There will be winners and losers in this, and that needs to get sorted out, but if you follow the earnings here, I wouldn't give up on the AI trade," he added. "I think that some of these stocks now have just huge upside given the pullbacks."
