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Financial Markets 12/18 15:25
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.
Also helping to drive the U.S. stock market was Micron Technology, the
seller of memory and storage for computers, which rallied 10.2% after reporting
better profit and revenue for the latest quarter than analysts expected. CEO
Sanjay Mehrotra said each of the company's business units enjoyed stronger
revenue and made more in profit off each $1 of that revenue.
Micron also gave forecasts for upcoming profit and revenue that blew past
analysts' expectations, and Mehrotra credited its position as an "AI enabler,"
among other things.
Billions of dollars are flowing into artificial-intelligence technology,
which helped superstar stocks like Nvidia lead the market for years.
But questions are rising about whether those stock prices shot too high and
whether customers will get a good-enough return on their AI investments through
bigger profits and productivity. Worries are also weighing on companies that
are borrowing lots of money amid the AI frenzy.
Oracle and Broadcom have been at the center of such concerns recently, and
their stock prices had been falling sharply since last week despite both
reporting better profits for the latest quarter than analysts expected. On
Thursday, Oracle added 0.9%, and Broadcom rose 1.1%.
Nvidia, the chip company that's become Wall Street's most influential
because of its immense size, gained 1.8%.
Another winner was Trump Media & Technology Group, which jumped 41.9% to
trim some of its steep loss for the year so far, 69.3% coming into the day. The
company, which began with President Donald Trump's Truth Social platform and
then moved into cryptocurrencies and various other lines of business, is now
moving into nuclear power.
It's merging with TAE Technologies in an all-stock deal, and each company
will own roughly half of the combined business. The companies said the deal
would pair TMTG's ability to raise significant money by attracting investors
with TAE's technology. They hope to get TAE's nuclear-fusion reactors, which
would create power in a similar way as the sun does, running commercially.
Cintas rose 1.3% after the provider of work uniforms and cleaning supplies
reported stronger profit for the latest quarter than analysts expected, while
also announcing a program to send up to $1 billion to shareholders by buying
back its own stock.
Darden Restaurants, the company behind Olive Garden and LongHorn Steakhouse,
climbed 1.8% even though its profit for the latest quarter fell short of
analysts' expectations. Its growth in revenue topped forecasts, benefiting from
both the opening of new restaurants and increased revenue at its older
locations.
CarMax dropped 4.2% even though the auto retailer reported a stronger profit
for the latest quarter than analysts expected. It said it may make less profit
from each $1 of revenue in sales of used autos during the current quarter, as
it tries to get more competitive in the market. It also plans to increase
spending on marketing to drive more customers to lots.
All told, the S&P 500 rose 53.33 points to 6,774.76. The Dow Jones
Industrial Average added 65.88 to 47,951.85, and the Nasdaq composite jumped
313.04 to 23,006.36.
In stock markets abroad, indexes rose 0.6% in London, 0.8% in France and 1%
in Germany after the Bank of England cut its key interest rate and the European
Central Bank kept its steady.
Asian indexes were mixed, with stocks falling 1.5% in South Korea but adding
0.2% in Shanghai.
In the bond market, Treasury yields sank following the cooler-than-expected
report on U.S. inflation.
The yield on the 10-year Treasury fell to 4.11% from 4.16% late Wednesday.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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