US stocks experienced a notable rise on Thursday, driven by a cooler-than-expected inflation report and strong earnings from chipmaker Micron Technology. The Consumer Price Index (CPI) data revealed a year-over-year increase of only 2.7%, significantly lower than the 3.1% rise that economists had predicted. This unexpected dip in inflation has bolstered investor confidence, raising hopes that the Federal Reserve may continue its rate-cutting cycle into next year.
The tech sector, which had faced recent volatility, found relief as major chip stocks rebounded. Micron Technology reported revenues of $13.6 billion, exceeding Wall Street’s expectations of $12.8 billion. The company also projected revenues of $18.7 billion for the current quarter, surpassing analyst forecasts of $14.2 billion. This performance has reassured investors regarding the ongoing demand for AI chips, alleviating concerns that had led to a recent sell-off in the sector.
Market Implications and Investor Sentiment
As the markets reacted positively to the CPI report, major indexes saw significant gains shortly after the opening bell. The S&P 500 rose to 6,772.09, up 0.75%, while the Dow Jones Industrial Average climbed to 48,087.17, gaining 0.42% or 192.17 points. The tech-heavy Nasdaq Composite surged by more than 1%, reaching 22,920.74.
The latest CPI data is seen as a critical piece of good news for a market that has been navigating high valuations and uncertainties surrounding the AI sector. According to Jamie Cox, a managing partner at Harris Financial Group, the inflation pressures that had previously impacted the market have subsided, paving the way for potential rate cuts in January 2026. He stated, “The inflation bump from tariffs is behind us, so the path is now clear for the Fed to lower rates again.”
Scott Helfstein, head of investment strategy at Global X, noted that the CPI numbers support the narrative that risks to the job market are increasing more rapidly than inflation risks. This sentiment has contributed to a growing belief that the Federal Reserve may cut rates by an additional 25 basis points by March 2026.
Sector Performance and Future Outlook
In addition to Micron’s strong performance, other tech stocks also benefited from the positive sentiment. Notable moves included a 2% increase in shares of Broadcom, Palantir, and Advanced Micro Devices, as well as gains of 2% for Taiwan Semiconductor and 1% for Nvidia.
Despite the optimism, some investors remain cautious. Paul Hickey, co-founder of Bespoke Investment Group, expressed a degree of skepticism regarding the overall AI sector, noting that while Micron’s pre-market gains have provided relief, recent performances of other AI-related stocks have led to concerns about sustainability.
Investors are closely monitoring the evolving economic landscape as they assess the implications of the latest inflation data and corporate earnings. With the Federal Reserve’s decisions likely to shape the market’s trajectory, the focus will remain on upcoming economic indicators and corporate performance reports in the weeks ahead.
