WALL Street’s main indexes closed higher on Thursday as a soft inflation report fed expectations for interest rate cuts by the Federal Reserve, while chipmaker Micron’s blowout forecast signaled strong AI demand.
The Consumer Price Index report showed that consumer prices increased less than expected in the year to November. The Labor Department’s Bureau of Labor Statistics did not publish month-to-month CPI changes after the 43-day shutdown of the government prevented the collection of October data.
“The constructive CPI report … starts to ease pressure on policymakers further to potentially get more comfortable cutting rates next year,” said Bill Merz, head of capital markets research at US Bank’s Asset Management Group. “We’ll want to see follow-through next month to ensure there wasn’t too much noise from the shutdown.”
The three major indexes rebounded from three-week lows. And the Russell 2000 index, tracking rate-sensitive smallcaps, also advanced.
A jobless claims report showed new applications fell last week, reversing the prior week’s surge and suggesting labour market conditions remained stable in December. Earlier this week, an official jobs report showed US job growth rebounded in November and the unemployment rate rose to 4.6 per cent.
Traders now see a 58 per cent chance for a dovish policy move by the Fed in March, according to CME’s FedWatch Tool.
According to preliminary data, the S&P 500 gained 52.48 points, or 0.78 per cent, to end at 6,773.91 points, while the Nasdaq Composite gained 311.60 points, or 1.37 per cent, to 23,004.92. The Dow Jones Industrial Average rose 69.36 points, or 0.14 per cent, to 47,955.33.
Consumer discretionary stocks gained as Lululemon surged on a report that activist investor Elliott has acquired more than a US$1 billion stake in the athletic-wear company. Starbucks also rallied.
Among tech stocks, Micron Technology jumped after the company forecast quarterly profit at nearly double what analysts were expecting on strong artificial intelligence-related demand.
Other memory companies including SanDisk and Western Digital also surged, while the Philadelphia SE Semiconductor Index climbed.
Companies’ massive debt-backed spending on developing AI technology and uncertainty about how they plan to monetise it have plagued risk-taking this quarter.
Oracle rose, recovering from a fall on Wednesday when funding plans for a Stargate data center sparked a broad equities selloff.
Trump Media & Technology jumped after the company and fusion power company TAE Technologies said they have agreed to combine in an all-stock deal valued at more than US$6 billion. REUTERS
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