US stocks experienced a significant rebound on Thursday as investors reacted positively to new data revealing easing inflation pressures, which may influence the future trajectory of interest rates. The tech-heavy Nasdaq Composite led the charge with a notable increase of 1.4%, driven by Micron Technology’s strong earnings report that saw its shares soar by 10%. This uptick in tech stocks came as a relief after the sector faced challenges earlier in the week due to concerns surrounding artificial intelligence (AI) investments.
The benchmark S&P 500 and the blue chip Dow Jones Industrial Average also saw gains of approximately 0.8% and 0.2%, respectively. The core driver for Thursday’s optimism was a cooler-than-expected Consumer Price Index (CPI) report, showing that inflation rose 2.7% year-over-year in November, alongside a core inflation rate of 2.6%. Both measures were below analyst forecasts of 3% and 3.1%.
Despite the positive data, some economists expressed caution about the reliability of the inflation figures due to the impacts of the recent US government shutdown. Additionally, Federal Reserve Governor Chris Waller hinted at support for potential rate cuts before the CPI data was released, indicating a shift in focus towards labor market conditions rather than ongoing price pressures.
The Department of Labor’s report showed a decrease in initial jobless claims to 224,000 for the week ending December 13, down 13,000 from the prior week, although this data is also viewed as volatile in the current economic climate.
On the tech landscape, Micron’s upbeat earnings and forecasts regarding strong demand for AI-related memory chips helped uplift sentiment, especially following a difficult session for tech stocks. Investors are now watching for continued signals of tech sector health, especially after Oracle’s recent misfortune of losing vital backing on a significant data center project, which negatively impacted major players like Nvidia and Broadcom.
In corporate news, Trump Media & Technology Group announced a $6 billion merger with TAE Technologies, a firm focused on fusion energy and backed by Alphabet and Chevron. This strategic move caused Trump Media shares to surge, as it is seen as a proactive step toward addressing energy demands linked to advancing AI technologies.
In another sector shift, cannabis stocks surged after President Trump signed an executive order aimed at easing restrictions on the cannabis industry. This move is anticipated to open doors for expanded research and development within the sector, enhancing its economic viability and reducing regulatory pressures on businesses involved.
Amid these economic shifts, Hut 8, a cryptocurrency mining company, revealed a massive $7 billion deal with Google to develop a data center in Louisiana, emphasizing the growing intersection between crypto and AI technology.
In the energy sector, shares of BP fell roughly 2.2% following news of a surprise CEO change, as the company experiences leadership shifts amid challenges to pivot back to fossil fuels after a previous focus on renewables.
Jobless claims statistics held steady with slight fluctuations, illustrating a labor market that remains under scrutiny. The latest CPI report has increased expectations regarding potential interest rate cuts by the Federal Reserve in the near future, slightly boosting the odds of such action next month.
The Nasdaq’s impressive gain, along with performances from major corporations, showcases the ongoing volatility in the markets as they respond to economic indicators and corporate performance in the tech sector. With forecasts predicting substantial growth in AI revenue and an overall bullish outlook for the S&P 500, the stage is set for a potentially dynamic close to the trading year.
