U.S. stocks jump after an encouraging inflation update, as Micron helps AI stocks stop their slide

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NEW YORK — U.S. stocks are jumping 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 rallied 0.9 per cent and is on track for its best day in three weeks, coming off a four-day losing streak. The Dow Jones Industrial Average was up 124 points, or 0.3 per cent, as of 2:07 p.m. Eastern time, and the strength for tech stocks had the Nasdaq composite up a market-leading 1.5 per cent.

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.

• S&P 500 market updates here

Inflation is still higher than anyone would like, at 2.7 per cent last month, but if it creeps closer to the Fed’s target of two per cent, U.S. Fed officials could feel more free to cut interest rates to help a slowing job market. Wall Street loves lower interest 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 12.8 per cent after reporting stronger 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 US$1 of that revenue.

Micron also gave encouraging forecasts for upcoming financial results, 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 AI investments through bigger profits and productivity. Worries are also weighing on companies that are borrowing lots of money to pay for AI investments.

Oracle and Broadcom have been at the center of such worries recently, and their stock prices have been falling sharply since last week despite both reporting better profits for the latest quarter than analysts expected. On Thursday, Oracle rose 0.4 per cent, and Broadcom added 1.1 per cent.

Nvidia, the chip company that’s become Wall Street’s most influential because of its immense size, gained 2.2 per cent.

Another winner was Trump Media & Technology Group, which jumped 39 per cent to carve into some of its steep loss for the year so far, 69.3 per cent coming into the day. The company, which began with U.S. 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 0.9 per cent 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 US$1 billion to shareholders by buying back its own stock.

Darden Restaurants, the company behind Olive Garden and LongHorn Steakhouse, rose 0.4 per cent 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 swung sharply between gains and losses and was most recently down 3.9 per cent. The auto retailer reported a stronger profit for the latest quarter than analysts expected. But it also said it may make less profit from each US$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 customers to lots.

• Latest economic news on BNNBloomberg.ca

In stock markets abroad, indexes rose 0.6 per cent in London, 0.8 per cent in France and one per cent 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 per cent in South Korea but adding 0.2 per cent in Shanghai.

In the bond market, Treasury yields sank following the encouraging report on U.S. inflation.

The yield on the 10-year Treasury fell to 4.12 per cent from 4.16 per cent late Wednesday.

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Stan Choe, The Associated Press

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.