Wall Street Rallies on Softer Inflation, Tech Rebound Led by Chips

U.S. stock indexes climbed on Friday as investors reacted to a November consumer price index print that showed core inflation much lower than expected and to outsized guidance from memory chip makers. The softer CPI reading reduced near term pressure on interest rates, while an abrupt surge in optimism about semiconductor earnings concentrated gains in technology, particularly memory and storage suppliers.

Micron Technology was the standout, jumping roughly 10 percent in premarket trading after forecasting quarterly profit at nearly double analyst expectations. The company attributed its upbeat outlook to soaring memory chip prices, tight supplies and strong demand from artificial intelligence data centers. The broader chip complex followed, with SanDisk up about 5.7 percent, Western Digital rising roughly 4 percent and Nvidia advancing near 1.3 percent, a sign that investors rotated back into AI related and hardware names after recent volatility.

The S&P 500 and Nasdaq extended an overnight recovery that had been building as futures indicated modest gains ahead of the CPI release. Premarket futures on Thursday showed the Dow up 0.13 percent, the S&P 500 up 0.41 percent and the Nasdaq up 0.75 percent, positioning markets to react strongly to the inflation surprise. Traders also cited initial jobless claims and corporate guidance as additional supports for risk appetite during the session.

Portfolio managers said the combination of a softer inflation print and tangible earnings momentum in capital goods and semiconductors temporarily eased concerns about technology valuations and a near term pivot by the Federal Reserve. Lower core inflation reduces the odds of additional rate increases and improves the real return calculus for long duration assets, which helped drive the rotation back into shares that have been most sensitive to policy expectations.

Not all corners of the market participated in the advance. Nike shares plunged after the company reported persistent margin weakness that the market linked to softness in China. The drop underscores a bifurcated recovery where technology and industrial firms benefiting from AI investment can outperform consumer discretionary names contending with regional demand pressures. Analysts and investors cautioned that the Nike move highlighted execution and regional risk that could temper consumer sector sentiment into the new year.

Market participants also flagged that the November CPI came with some complications tied to recent disruptions at government agencies, and advised caution in reading too much into a single monthly print. While the softer reading provided an immediate boost to equities, strategists stressed that sustained gains will depend on whether inflation momentum continues to decelerate, how supply constraints in semiconductors evolve, and whether corporate profit trends broaden beyond a handful of high profile beats.

For now, the data and Micron’s guidance produced a clear market reaction. Technology led the advance, lifting major indexes, but uneven corporate results and regional demand strains kept a guardrail on the breadth of the rally as investors weighed longer term implications for growth and policy.