NEW YORK (AP) — U.S. stocks rose on Thursday following an encouraging report on inflation that could help the Federal Reserve keep cutting interest rates next year. A strong profit report from Micron Technology also helped AI stocks halt their sharp slides, at least for now.
The S&P 500 climbed 0.8% and broke a four-day losing streak. The Dow Jones Industrial Average added 65 points, or 0.1%, and the strength for tech stocks sent the Nasdaq composite up a market-leading 1.4%.
Some relief came from a report showing that inflation was less bad last month than economists expected. That could soothe nerves at the Fed, which is responsible for keeping inflation low and for keeping the job market strong.
Inflation is still higher than anyone would like, at 2.7% last month, but if it creeps closer to the Fed’s target of 2%, Fed officials could feel more free to cut interest rates to help a slowing job market. Wall Street loves lower rates because they can boost the economy and prices for investments, even if they may also worsen inflation.
To be sure, some along Wall Street said Thursday’s inflation update may not move the needle much at the Fed given how noisy economic reports have been following the U.S. government’s earlier shutdown. Next month’s update on inflation could provide a better gauge of what’s actually happening. But a better-than-expected report on inflation is nevertheless better than the alternative.