Wall St closes higher fueled by tech rally, soft inflation data

Dec 18 (Reuters) – 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 U.S. 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 0.8%.

A jobless claims report showed new applications fell last week, reversing the prior week’s surge and suggesting labor market conditions remained stable in December. Earlier this week, an official jobs report showed U.S. job growth rebounded in November and the unemployment rate rose to 4.6%.

Traders now see a 58% chance for a dovish policy move by the Fed in March, according to CME’s FedWatch Tool.

The Dow Jones Industrial Average rose 65.88 points, or 0.14%, to 47,951.85, the S&P 500 gained 53.33 points, or 0.79%, to 6,774.76 and the Nasdaq Composite gained 313.04 points, or 1.38%, to 23,006.36.

Six of the 11 S&P sectors gained, led by consumer discretionary stocks, which rose 1.78%.

Lululemon surged 3.5% on a report that activist investor Elliott has acquired more than a $1 billion stake in the athletic-wear company. Starbucks also rallied 4.9%.

Among tech stocks, Micron Technology jumped 10.2% 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 2.6%.

Companies’ massive debt-backed spending on developing AI technology and uncertainty about how they plan to monetize it have plagued risk-taking this quarter.

Oracle rose 0.9%, recovering from a fall on Wednesday when funding plans for a Stargate data center sparked a broad equities selloff.

Trump Media & Technology jumped 41% after the company and fusion power company TAE Technologies said they have agreed to combine in an all-stock deal valued at more than $6 billion.

Advancing issues outnumbered decliners by a 1.9-to-1 ratio on the NYSE. There were 216 new highs and 105 new lows on the NYSE. On the Nasdaq, 2,892 stocks rose and 1,773 fell as advancing issues outnumbered decliners by a 1.63-to-1 ratio.

The S&P 500 posted 15 new 52-week highs and no new lows while the Nasdaq Composite recorded 112 new highs and 178 new lows.

Volume on U.S. exchanges was 16.89 billion shares, compared with the 16.96 billion average for the full session over the last 20 trading days.

(Reporting by Abigail Summerville in New York and Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by David Gregorio)