US stocks rose sharply on Thursday as investors digested a lighter-than-expected inflation report, easing concerns about persistent price pressures and helping spark a rebound in technology shares after a bruising run.
The Dow Jones Industrial Average traded 339 points higher, or 0.8%, while the S&P 500 advanced 1.1%.
The Nasdaq Composite outperformed, gaining 1.5%, as investors returned to growth-oriented stocks, particularly in the semiconductor sector.
The rally followed the release of the delayed November consumer price index report, the first inflation data published since the US government shutdown ended last month.
According to the Bureau of Labor Statistics, headline inflation rose 2.7% year over year, while core CPI, which excludes food and energy, increased 2.6%.
Economists polled by Dow Jones had expected headline inflation of 3.1% and core CPI of 3%, making the report a notable downside surprise.
Technology stocks, which had come under heavy pressure in recent sessions, were among the biggest beneficiaries of Thursday’s rally.
Micron Technology surged 13% after the chipmaker topped Wall Street estimates on both revenue and earnings for its fiscal first quarter and issued a strong revenue forecast for the current period.
Micron’s results helped reignite optimism around the artificial intelligence trade, which has faced increasing scrutiny amid concerns over capital intensity and valuation.
The rebound followed a difficult prior session for the sector, when leading semiconductor names tied to AI suffered sharp losses.
CPI report eases inflation anxiety, despite limitations
The CPI report was pushed back from its original Dec. 10 release date due to the longest-ever US government shutdown, which disrupted data collection.
The BLS said the report did not include month-over-month changes, as it was unable to retroactively collect October survey data.
Instead, the agency relied on “nonsurvey data sources” to calculate the index.
Given the unusual structure of the report, economists cautioned against reading too much into the data as a definitive signal of a renewed disinflation trend.
Even so, markets reacted positively, with stock futures extending gains after the CPI release. Initial jobless claims, which also came in slightly below expectations, added to the upbeat tone.
Market recovers from rough prior session
Thursday’s gains came after a fourth consecutive down day for the S&P 500 and the Dow Jones Industrial Average.
The Nasdaq Composite was the weakest of the three major benchmarks in the previous session, falling 1.8%.
In Wednesday’s regular trading, Oracle shares slid more than 5% after the Financial Times reported that a primary investor had pulled out of a $10 billion Michigan data centre project.
The news rattled markets already uneasy about the scale and financing risks behind large AI infrastructure investments.
That concern spilt over into the broader chip sector, with Broadcom dropping 4.5% and shares of Nvidia and Advanced Micro Devices also declining.
Despite the recent rotation away from technology stocks, the sector remains on pace to finish 2025 with gains of roughly 19%.
Labor market data reinforces fed Pause Expectations
On the labour market front, the number of Americans filing new claims for unemployment benefits fell last week, signalling continued stability in employment conditions.
Initial jobless claims declined by 13,000 to a seasonally adjusted 224,000 for the week ended December 13, according to the Labor Department.
Economists surveyed by Reuters had forecast 225,000 claims.
Claims have fluctuated in recent weeks, reflecting seasonal distortions around Thanksgiving.
Employers appear reluctant to expand hiring aggressively but are also not engaging in widespread layoffs.
The claims data covered the period used to survey businesses for December’s nonfarm payrolls report, which is due in January.
November payrolls rose by 64,000, while the unemployment rate climbed to 4.6%, its highest level since September 2021, partly distorted by technical issues related to the government shutdown.
The Federal Reserve cut its benchmark interest rate by 25 basis points last week, bringing it to a range of 3.50% to 3.75%.
Policymakers, however, signaled a pause in further rate cuts as they seek clearer evidence on the trajectory of inflation and the labor market.
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