(Dec 18): Stocks rallied at the open, bouncing after a sharp selloff on Wednesday, as a cooler-than-expected inflation report lifted hopes that the Federal Reserve would cut interest rates further. An optimistic outlook in the tech sector also lifted sentiment.
The S&P 500 Index opened 1% higher on Thursday morning and looks to snap a four-day losing streak. Micron Technology Inc. was the top-performing stock in the benchmark after providing an upbeat forecast, citing the ability to charge more for products given rising demand and supply shortages.
The tech-heavy Nasdaq 100 Index advanced 1.3%, rebounding after its biggest daily drop in a month, while the blue chip Dow Jones Industrial Average rose 0.5%.
“The earnings engine in the United States is on,” Emily Roland, co-chief investment strategist at Manulife John Hancock Investments, in a Bloomberg TV interview. She’s looking for earnings growth outside of the tech for 2026, after being overweight the sector for much of 2025.
“We still like tech, but there’s no doubt about it, it’s expensive,” she added.
See also: Tech stocks, Oracle lead S&P 500 higher amid mass options expiry
The lofty valuations of artificial intelligence (AI) stocks continue to concern investors. About 57% of participants in a Deutsche Bank survey said a potential plunge in AI valuations is the biggest risk to market stability in 2026. Separately, JPMorgan Chase & Co warned of “extreme crowding” in speculative stocks, including a handful of AI-linked names.
Thursday’s market move follows a cooler-than-expected inflation report. The core consumer price index rose 2.6% in November, according to the Bureau of Labor Statistics — well below expectations for a 3.1% gain. Traders also focused on jobless claims data, which showed continuing claims rising to 1.9 million.
“The Fed could look at the increase in the unemployment rate and the tame inflation reading as a reason to cut again,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management.
See also: US stocks stage comeback as CPI fuels Treasury gains
US President Donald Trump said in a televised address on Wednesday night that he would soon pick a new Fed chair that would bring rates down significantly further as he sought to calm concerns about the high cost of living.
“A Santa Rally could still be in the cards,” said David Russell, global head of market strategy at TradeStation,
Still ahead, FedEx Corp and Nike Inc are set to report earnings after the closing bell on Thursday. Traders will also parse existing home sales data and a University of Michigan survey of inflation expectations, which are expected on Friday morning, for additional clues on the central bank’s rate path.
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