U.S. equities rallied Thursday as investors latched onto a cooler-than-expected inflation print and a renewed burst of optimism around AI-linked chip demand. The S&P 500 snapped a four-day slide, climbing 0.79% to 6,774.76, while the Nasdaq Composite rose 1.38% to 23,006.36. The Dow added 65.88 points (0.14%) to 47,951.85.
The catalyst was the delayed November CPI report, released after the shutdown-related data gap. Headline CPI ran 2.7% year over year versus 3.1% expected, and core CPI printed 2.6% versus 3.0% expected. Traders paired that with another sign of labor market cooling. Initial jobless claims fell to 224,000 for the week ended Dec. 13.
Leadership was narrow but forceful. Chip and mega-cap tech shares led after Micron guided well above consensus, helping rekindle the AI trade. Micron jumped about 10% on the session after strong forward guidance. Meanwhile, the rate backdrop also helped. The 10-year Treasury yield slipped to 4.12%, offering oxygen to duration-sensitive growth stocks.
One wrinkle: economists cautioned the CPI print may be noisier than usual because October CPI was canceled during the shutdown, limiting month-to-month comparisons. BLS noted the report lacked usual datapoints, which raises the odds the market could reverse if December inflation re-accelerates or if revisions land awkwardly.
Position for a market that’s trading inflation direction, not level. If the next inflation and jobs prints validate Thursday’s signal, the rally can broaden beyond AI. If they don’t, leadership concentration and lofty expectations are the risk.
