NEW YORK — U.S. stocks finished higher Thursday after a session that flipped the script on this week’s risk-off mood, with cooling inflation data and a powerful earnings catalyst in semiconductors helping investors lean back into growth.
As of 4:18 p.m. ET—minutes after the closing bell—the S&P 500 ended up 0.78% at 6,773.91, the Nasdaq Composite rose 1.37% to 23,004.92, and the Dow Jones Industrial Average added 0.14% to 47,955.33, according to Reuters’ closing data. [1]
The move snapped a short losing streak for the broader market and arrived at a crucial moment: investors are trying to determine whether December can still deliver a “Santa rally” after a choppy stretch that has been dominated by questions about AI spending, valuations, and the path of Federal Reserve rate cuts. [2]
What moved the US stock market today: inflation data cooled, but came with a big caveat
The day’s macro catalyst was an unusual inflation release—“good news” at the headline level, but complicated by missing details.
Reuters reported that the Consumer Price Index (CPI) rose 2.7% year over year in November, below the 3.1% consensus estimate, while core CPI (excluding food and energy) came in at 2.6%. However, because a 43-day government shutdown disrupted data collection, the Bureau of Labor Statistics did not publish month-to-month CPI changes, leaving investors to interpret a “partial” picture of inflation. [3]
Markets treated the print as broadly supportive: bond yields eased, rate-cut conversations revived, and equities caught a bid—especially in rate-sensitive areas and long-duration tech.
AP noted the inflation update boosted hopes that the Fed has more room to cut rates as the job market cools, contributing to Thursday’s broad bounce. [4]
Fed rate-cut bets: traders leaned dovish as yields eased
With inflation appearing to drift closer to the Fed’s target, traders nudged expectations toward easier policy in 2026.
Reuters’ market coverage highlighted that futures pricing showed traders seeing a 58% chance of a dovish policy move in March, according to CME’s FedWatch tool. [5]
Bond markets reflected that tilt. AP reported the 10-year Treasury yield fell to about 4.11%, down from the prior day, a move that typically helps growth stocks by lowering the discount rate on future earnings. [6]
That rates backdrop is also colliding with politics: a separate Reuters report said President Donald Trump has repeatedly pushed for lower rates and suggested the next Fed chair should favor meaningfully lower interest rates—comments that markets watch closely for what they imply about future Fed leadership and perceived central-bank independence. [7]
Tech and AI stocks led the comeback—Micron did the heavy lifting
After Wednesday’s selloff (driven in part by renewed anxiety over AI-related capex and monetization), Thursday’s market had a clear leader: chips.
Reuters’ closing recap said the rally was powered by a softer inflation report and Micron’s blowout forecast, which signaled ongoing demand tied to AI infrastructure. [8]
AP added that Micron surged after beating expectations and emphasizing its role as an “AI enabler,” helping stabilize sentiment around other major AI-linked names. [9]
The rebound matters because the market’s biggest debate into year-end isn’t whether AI is transformative—it’s whether investors have already priced in too much perfection. Reuters’ global markets wrap characterized the AI trade as a “rollercoaster,” oscillating between skepticism and renewed confidence. [10]
The day’s biggest stock movers: Lululemon, Trump Media, cannabis—and mixed retail signals
Beyond semiconductors, Thursday had plenty of headline-driven moves that shaped sector leadership:
- Consumer discretionary outperformed, helped by Lululemon after reports that activist investor Elliott built a stake of more than $1 billion, according to Reuters. [11]
- Starbucks also rallied, supporting the discretionary bid, Reuters said. [12]
- Trump Media & Technology Group jumped sharply after announcing a deal with fusion company TAE Technologies (valued at more than $6 billion), a move cited by both Reuters and AP as a major single-stock driver. [13]
- Cannabis stocks surged after Trump signed an executive order aimed at quickly moving marijuana toward a less restrictive federal classification (a shift Reuters described as the biggest change in marijuana regulation since 1970). [14]
- On the consumer and earnings front, AP said Cintas and Darden Restaurants delivered upbeat results that helped the broader tone, while CarMax fell on concerns about future profitability—an illustration of how selective the market remains on consumer spending stories. [15]
Global backdrop: central banks abroad, the dollar, oil, and “risk-on” crosscurrents
While the U.S. inflation print was the main driver for Wall Street, global policy headlines also shaped the tone.
Reuters reported that the Bank of England cut rates while signaling limited room for further easing, and the European Central Bank held rates steady with a more upbeat economic tone—crosscurrents that contributed to choppy currency trading even as global equities improved. [16]
In commodities, oil prices settled modestly higher (Reuters cited supply-risk concerns), while gold eased despite the softer inflation data. [17]
After-hours watch: FedEx results land after the bell
After the close, FedEx was in focus. Reuters reported the delivery giant posted higher quarterly profit and revenue and raised the low end of its full-year earnings outlook, crediting peak-season pricing actions and ongoing cost cuts—even as shipment volumes remained soft. [18]
For investors, FedEx is often treated as a read-through on industrial demand and the health of shipping lanes tied to U.S. consumption—making the print relevant even on a day dominated by inflation and AI.
Forecasts and market outlook: what strategists expect next for 2026
Thursday’s rally may have been about “today,” but a growing share of market conversation is shifting to what comes next—especially with major indexes near historic highs and the AI theme still driving leadership.
A CBS News roundup of Wall Street outlooks published Thursday highlighted a bullish baseline for 2026:
- UBS projected the S&P 500 could reach 7,700 by the end of 2026, implying roughly mid-teens upside from current levels. [19]
- J.P. Morgan projected 13% to 15% gains next year, citing earnings growth. [20]
- BofA Global Research expects earnings growth in the “mid-double digits” and argued that earnings—not just valuation expansion—could do more of the lifting in 2026. [21]
- The same CBS report cited estimates that AI-related capex from major tech firms could approach $520 billion in 2026, keeping infrastructure spending (and AI-adjacent industrial demand) in focus. [22]
At the same time, technical and sentiment indicators suggest investors are still debating whether the market is setting up for a clean breakout—or a more volatile reset. A MarketWatch analysis published Thursday described the S&P 500 as range-bound, with key support and resistance zones that could define the next major move. [23]
What to watch next: the next inflation “clean read,” rates, and the AI monetization question
The near-term playbook for traders now hinges on three questions:
- Will inflation confirm Thursday’s signal? With shutdown-related distortions, markets will be looking for a “cleaner” sequence of data in the next releases to validate rate-cut expectations. [24]
- Can tech leadership broaden—or will the AI debate intensify? Micron helped stabilize the trade today, but concerns about capex and monetization haven’t disappeared; they’ve simply paused. [25]
- Do earnings keep delivering? From Micron’s AI-linked strength to FedEx’s pricing-and-cost story, investors are rewarding companies that can show both demand and margin resilience. [26]
Bottom line
At 4:18 p.m. ET on Dec. 18, 2025, the U.S. stock market closed decisively higher, led by a tech rebound and a rates tailwind after a softer inflation print. But the rally’s durability will depend on whether upcoming data can confirm that inflation is truly cooling—and whether the market’s most important theme, AI, can keep translating record investment into sustainable profits.
For now, Thursday delivered what investors wanted most: a reminder that even in a “rollercoaster” market, a single day of better inflation and a single blockbuster tech catalyst can still change the tone fast. [27]
References
1. www.tradingview.com, 2. www.reuters.com, 3. www.reuters.com, 4. apnews.com, 5. www.reuters.com, 6. apnews.com, 7. www.reuters.com, 8. www.tradingview.com, 9. apnews.com, 10. www.reuters.com, 11. www.tradingview.com, 12. www.tradingview.com, 13. www.tradingview.com, 14. www.reuters.com, 15. apnews.com, 16. www.reuters.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.cbsnews.com, 20. www.cbsnews.com, 21. www.cbsnews.com, 22. www.cbsnews.com, 23. www.marketwatch.com, 24. www.reuters.com, 25. www.reuters.com, 26. www.tradingview.com, 27. www.reuters.com
