US equities ended Thursday firmly higher: the S&P 500 gained 0.79%, the Dow added 0.14%, and the Nasdaq 100 jumped 1.51%. The session looked like a direct reversal of Wednesday’s selloff, with investors rotating back into risk—most notably semiconductors and the “Magnificent Seven.”
Micron was the key catalyst. The company delivered an upbeat outlook for the current quarter, pointing to surging demand and supply tightness that is giving it more pricing power. That message sparked a broad rebound across the chip space, lifting names tied to memory, storage, and semiconductor equipment.
Inflation Cools, Yields Fall, Risk Appetite Improves
The second major tailwind came from macro data. Weekly jobless claims declined to 224,000, close to expectations—supportive in the sense that it avoided any shock on the labor front. More importantly, inflation data surprised to the downside: November CPI and core CPI both printed below forecasts, and core inflation hit its slowest pace in roughly 4.5 years.
Markets responded immediately through rates. Treasury yields moved lower, with the 10-year drifting toward 4.10% and marking a roughly 1.5-week low. Lower yields eased financial conditions and boosted growth equities, where valuations are particularly sensitive to discount rates.
Yield Curve Signals a More Complex Message
Despite the “Fed-friendly” inflation narrative, the market is also watching the yield curve. A steeper curve often reflects demand for short-dated paper alongside pressure on the long end, where investors require extra compensation for inflation risk and policy uncertainty. The commentary around increased short-term T-bill purchases to support liquidity adds another layer to the curve story: conditions can look easier at the front end while longer-term risk premia stay stubborn.
European rates were mixed. The ECB held its deposit facility rate at 2.00% and nudged up its 2025 Eurozone growth forecast, while keeping core inflation projections steady. In the UK, the Bank of England cut its policy rate by 25 bps to 3.75% on a close vote, reinforcing the idea that easing is underway but likely to remain gradual and data-dependent.
Winners and Losers of the Session
Semiconductors and mega-cap tech dominated the upside. Tesla rose more than 3%, Amazon and Meta gained more than 2%, and Nvidia, Microsoft, and Alphabet added over 1%. Several single-stock stories also stood out, including DJT’s surge on merger news, Rivian’s jump after an upgrade, and GE Vernova’s rise following a bullish rating change.
On the downside, company-specific guidance and clinical updates weighed on select names. Insmed slid sharply after a mid-stage trial miss, Birkenstock fell after issuing a softer EBITDA outlook than expected, and FactSet dropped on its revenue guidance. Cinemark and Lennar also weakened following downgrades.
Attention now shifts to housing data and consumer confidence. Markets are currently discounting roughly a 27% chance of a Fed rate cut at the January 27–28 meeting. After a “soft” CPI print, sensitivity to upcoming data increases: continued cooling could reinforce the tech-led rebound, but any renewed inflation pressure—or a renewed rise in long-end yields—could quickly cap upside in growth stocks.
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Twitter: @BigStakeTrades
Twitter: @BigStakeTrades