NEW YORK — The Dow Jones Industrial Average (DJIA) traded firmly higher Thursday as investors digested a cooler-than-expected U.S. inflation report that reignited hopes the Federal Reserve could keep easing policy into 2026—while also raising fresh questions about the quality of the data after an extended government shutdown disrupted price collection.
As of about 1:50 p.m. Eastern, the Dow was up roughly 286 points (+0.6%) near 48,172 (quotes delayed at least 15 minutes), while the broader market outperformed with the S&P 500 up about 1.2% and the Nasdaq up about 1.8%. [1]
That intraday strength followed a choppy stretch for U.S. stocks, including Wednesday’s decline as investors fretted over lofty AI valuations and the financing costs of mega data-center buildouts. [2]
Why the Dow Jones is rising today
The day’s main catalyst was the long-awaited November Consumer Price Index (CPI) release, which showed inflation cooling more sharply than economists expected—at least on the surface.
The Bureau of Labor Statistics (BLS) reported:
- Headline CPI (all items): +2.7% year-over-year (unadjusted)
- Core CPI (excluding food and energy): +2.6% year-over-year
- A 0.2% seasonally adjusted increase over the two months from September to November, because October data were not collected during a lapse in appropriations. [3]
For markets, the immediate read-through was simple: cooler inflation increases the Fed’s room to cut if growth and the labor market keep softening. In Reuters’ post-release roundup, strategists noted the CPI surprise nudged expectations modestly toward a potential January 2026 cut—though several cautioned that the shutdown’s distortions make it difficult to draw clean conclusions from a single report. [4]
The CPI “data fog”: why investors are cheering—but not fully trusting—the print
Today’s inflation data came with a major asterisk. Both BLS and independent economists have flagged that the CPI process was disrupted by the government shutdown, and the agency did not publish the usual month-to-month changes for October because the underlying data could not be collected retroactively. [5]
Some analysts argue the headline numbers may be biased lower because price gathering resumed late in the month and may have captured seasonal discounting more heavily than usual. The Washington Post reported economists warning the report is “hard to come away with serious conclusions” from, given gaps and quirks in the collection window—especially around housing-related components, which typically carry enormous weight in CPI. [6]
Investopedia also highlighted that while the annual inflation drop looks dramatic, distortions tied to the shutdown leave economists skeptical about treating this as a definitive trend shift. [7]
Bottom line: markets are trading the direction of the surprise (cooler), while debating the durability of it.
Rates, yields, and the “Fed cut” narrative powering the rally
The bond market response reinforced the “easier policy” story.
- Reuters’ CPI reaction note showed Treasury yields falling, with the 10-year near 4.13% after the data. [8]
- Reuters market data also showed the U.S. 10-year yield around 4.118%, down on the day. [9]
That drop in yields matters for the Dow Jones because many of its biggest influences—industrials, financials, and mega-cap “quality” names—are sensitive to discount rates and recession risk.
Stock-specific drivers: tech bounce helps the Dow, even after AI jitters
While the Dow is often framed as an “old economy” index, today’s leadership again underscores how the DJIA has evolved.
A key tailwind Thursday was a rebound in AI-linked names after a bruising pullback earlier in the week. The Associated Press highlighted that Micron’s earnings and outlook helped stabilize sentiment around AI infrastructure spending, lifting heavyweight tech across the tape. [10]
The market’s AI anxiety hasn’t disappeared—investors have been questioning whether the payoff timeline justifies the scale of capital spending, especially for companies leaning on debt to fund massive projects. Those concerns weighed on stocks in the prior session, when tech-linked selling pushed major indexes lower. [11]
Still, Thursday’s action showed that one clean macro catalyst (cooler CPI) can quickly refocus traders on the bullish case: lower inflation → lower yields → easier financial conditions.
“Dow at 1:50”: the intraday snapshot investors are watching
At roughly 1:50 p.m. ET, the Dow hovered near 48,172 (+0.6%), holding above the psychologically important 48,000 level as the broader market posted stronger gains. [12]
Earlier in the session, the AP pegged the Dow up about 153 points around 12:55 p.m. ET, illustrating how the rally strengthened as the afternoon developed. [13]
Global backdrop: central banks add to the “easing cycle” theme
The Dow’s rise wasn’t happening in a vacuum. Global markets were also reacting to major central bank decisions overseas:
- The Bank of England cut rates, while the European Central Bank held steady, according to the AP’s global market wrap. [14]
- In the U.K., the Guardian reported the BoE reduced its policy rate to 3.75%, with economists debating how many additional cuts might follow in 2026. [15]
That global easing tone can support U.S. equities—particularly multinational Dow components—by easing financial conditions and improving cross-border growth expectations.
Political and Fed leadership noise returns to the tape
Adding another layer: Fed leadership speculation and White House messaging.
Reuters reported White House economic adviser Kevin Hassett praised the CPI report publicly and said there was “lots of room” for the Fed to cut rates, while also calling for more transparency from the central bank. Reuters also noted Hassett is seen as a leading contender to succeed Fed Chair Jerome Powell. [16]
For markets, this matters less as a day-to-day trading input than the CPI itself, but it can influence longer-horizon expectations about how aggressively the Fed might prioritize growth versus inflation going forward.
Dow Jones forecast: what analysts and traders are saying next
Today’s rally is meaningful, but the next question is whether it turns into a durable year-end run—or just another headline-driven bounce.
1) Macro forecast: January cut odds rise—cautiously
Reuters’ compilation of strategist reactions captured the split:
- The “doves” argue cooling inflation plus rising unemployment risk could justify another cut soon.
- The “skeptics” argue the shutdown made the report unusually noisy, and the Fed may wait for cleaner data. [17]
Importantly, the BLS itself emphasized the data collection gap and the unusual “two-month” reporting structure this time around. [18]
2) Technical outlook: key Dow levels into year-end
With the Dow back above 48,000, technicians are focusing on whether price can reclaim the next resistance zones.
FXEmpire flagged these reference points for the DJIA:
- Resistance: ~48,500, then the Dec. 12 record high around 48,917, then 49,000
- Support: ~48,000, then 47,500, then the 50-day EMA near 47,333 [19]
Meanwhile, Reuters market pricing today keeps the index in the “upper range” of December’s trading, consistent with a market trying to stabilize after the AI-driven drawdown. [20]
3) Year-end “Santa rally” watch: back on the table, but not guaranteed
Some market commentary Thursday framed the CPI surprise as a potential spark for a late-December push, especially after the market’s recent slide.
An Investing.com analysis argued that—with just a handful of sessions left in the year—cooling inflation has put a year-end rally “back on the table,” as investors reposition for 2026. [21]
But the caution is straightforward: if inflation data proves distorted, or if AI spending fears resurface, the rally can lose oxygen quickly.
What to watch next for the Dow Jones
If you’re following the DJIA into the close and into next week, these are the catalysts most likely to keep driving direction:
- Bond yields: continued drift lower supports equities; a yield rebound can pressure valuations. [22]
- Follow-through from the CPI surprise: markets will debate whether this is a true disinflation trend or a shutdown-related statistical mirage. [23]
- AI capex and financing headlines: sentiment remains fragile after recent worries about project economics and funding. [24]
- The next CPI date: BLS has scheduled December CPI for Jan. 13, 2026, a release likely to carry extra weight given today’s data controversy. [25]
The takeaway
At 1:50 p.m. ET on Dec. 18, 2025, the Dow Jones Industrial Average was firmly higher, powered by a cooler-than-expected CPI report that pushed yields down and revived the “Fed can keep cutting” narrative. [26]
But today’s optimism comes with a warning label: inflation data distorted by the government shutdown may not be reliable enough to settle the debate about where prices—and Fed policy—are really headed in early 2026. [27]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.bls.gov, 4. www.reuters.com, 5. www.bls.gov, 6. www.washingtonpost.com, 7. www.investopedia.com, 8. www.reuters.com, 9. www.reuters.com, 10. apnews.com, 11. www.investors.com, 12. www.reuters.com, 13. apnews.com, 14. apnews.com, 15. www.theguardian.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.bls.gov, 19. www.fxempire.com, 20. www.reuters.com, 21. www.investing.com, 22. www.reuters.com, 23. www.washingtonpost.com, 24. www.investors.com, 25. www.bls.gov, 26. www.reuters.com, 27. www.reuters.com
