Wall Street rises after an encouraging inflation update, as Micron helps AI stocks stop their slide

U.S. stocks rallied Thursday, breaking a four-day losing streak after an encouraging inflation report boosted investor confidence that the Federal Reserve could continue cutting interest rates next year. The S&P 500 climbed 0.8%, while the Dow Jones Industrial Average added 65 points, or 0.1%. Technology stocks led the gains, pushing the Nasdaq composite up 1.4%.

The latest inflation data showed prices rose 2.7% last month, lower than economists had predicted. While still above the Fed’s 2% target, the better-than-expected report suggests inflation is gradually cooling, potentially giving the central bank more flexibility to lower interest rates to support a slowing job market.

Some market analysts cautioned that the inflation update might not significantly influence Fed decision-making, particularly given recent inconsistencies in economic data following the U.S. government shutdown earlier this year. Many believe next month’s inflation report will provide a clearer picture of underlying trends.

Semiconductor company Micron Technology emerged as one of the day’s standout performers, surging 10.2% after reporting quarterly profit and revenue that exceeded analyst expectations. CEO Sanjay Mehrotra highlighted improved revenue and profit margins across all business units, crediting Micron’s position as an “AI enabler” among other factors. The company’s forward guidance also surpassed Wall Street forecasts.

Micron’s strong performance helped halt recent declines in artificial intelligence-related stocks. The AI sector has driven market gains for years, with companies like Nvidia leading the charge, but recent concerns have emerged about whether these stock valuations have become excessive and whether customers will achieve sufficient returns on their AI investments.

Companies heavily invested in the AI boom, such as Oracle and Broadcom, had been under pressure despite recently reporting better-than-expected quarterly profits. Both stocks rebounded Thursday, with Oracle gaining 0.9% and Broadcom rising 1.1%. Nvidia, whose enormous market value gives it outsized influence over market movements, climbed 1.8%.

Trump Media & Technology Group experienced a dramatic 41.9% surge after announcing its merger with nuclear fusion company TAE Technologies in an all-stock deal. The combined entity, which will be roughly equally owned by both companies, aims to pair TMTG’s fundraising capabilities with TAE’s nuclear fusion technology. Despite Thursday’s jump, Trump Media remains down significantly for the year.

In other corporate news, Cintas rose 1.3% after the uniform and business supplies provider beat profit expectations and announced a $1 billion share buyback program. Darden Restaurants, parent company of Olive Garden and LongHorn Steakhouse, climbed 1.8% despite missing profit expectations, as its revenue growth exceeded forecasts.

CarMax shares declined 4.2% despite reporting stronger-than-expected quarterly profits. The company warned of potential margin pressure in used auto sales as it increases competitive pricing and boosts marketing to attract more customers.

European markets also moved higher Thursday after key central bank decisions. The Bank of England cut its main interest rate, while the European Central Bank held rates steady. London’s market rose 0.6%, Paris climbed 0.8%, and Frankfurt added 1%. Asian markets delivered mixed results, with South Korean stocks falling 1.5% while Shanghai edged up 0.2%.

In bond markets, Treasury yields declined following the better-than-expected inflation data. The yield on the benchmark 10-year Treasury fell to 4.11% from 4.16% the previous day, reflecting increased investor confidence that the Fed will have room to continue easing monetary policy in the coming months.

The S&P 500 closed at 6,774.76, the Dow Jones at 47,951.85, and the Nasdaq at 23,006.36, reflecting a broad market recovery driven by improving inflation outlook and strong performance in the technology sector.