U.S. stocks moved higher on Thursday, with the S&P 500 leading gains as major technology shares rebounded from a recent selloff. The rally followed weaker-than-expected inflation data, which strengthened expectations that the Federal Reserve could deliver additional interest rate cuts next year.
By 2:42 p.m. ET, the Dow Jones Industrial Average was up 112 points, or 0.2%. The S&P 500 gained 0.8%, while the Nasdaq Composite jumped 1.4%, driven by strong performance across large-cap technology stocks.
Cooling inflation strengthens rate-cut expectations
U.S. consumer inflation increased less than forecast in November, marking the first major inflation release since the government shutdown ended in mid-November. The consumer price index rose 2.7% year over year, down from 3.0% previously and below expectations of 3.1%.
Core inflation, which excludes food and energy, climbed 2.6% annually, also coming in below the 3.0% consensus estimate. The Bureau of Labor Statistics noted that October CPI data was not released due to data collection disruptions caused by the prolonged government shutdown.
Analysts at Capital Economics cautioned that while the data may point to easing inflation pressures, the sharp slowdown—particularly in services-related categories such as shelter—remains unusual. They said upcoming December data will be crucial to confirm whether the trend reflects genuine disinflation or a temporary statistical distortion.
The softer inflation figures reinforced expectations for Federal Reserve rate cuts, with markets now pricing in roughly an 80% chance of at least 50 basis points of cuts through the end of 2026, up from 75% before the data release.
Micron earnings lift tech sentiment
Investor sentiment received an additional boost after Micron Technology posted stronger-than-expected fiscal first-quarter earnings and issued guidance for the current quarter that nearly doubled analyst forecasts. The memory chipmaker pointed to strong and sustained demand from the artificial intelligence sector as companies continue expanding data center capacity.
Micron, along with Samsung Electronics and SK Hynix, is a key supplier of high-bandwidth memory used in AI processors. Robust demand for these chips has helped offset weaker sales in consumer electronics.
Big technology stocks recovered after several days of losses, with Alphabet, Nvidia, Meta Platforms, and Microsoft each rising more than 2%.
Instacart slides on FTC probe report
Elsewhere, Instacart shares dropped sharply after a Reuters report said the company is facing a U.S. Federal Trade Commission investigation into alleged AI-driven price discrimination. The report follows growing scrutiny from consumers and lawmakers, after a recent study found price differences of up to 23% for identical items.
CarMax shares declined after the used-car retailer said it plans to reduce retail margins and increase marketing spending in the current quarter, despite reporting third-quarter sales that exceeded expectations.
In contrast, MillerKnoll gained following solid earnings results and upbeat guidance, while Lululemon Athletica surged after reports that activist investor Elliott had built a stake of more than $1 billion in the apparel company.
