Stocks rise, Treasury yields edge down as US inflation softens
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 10, 2025. REUTERS/Brendan McDermid
NEW YORK/LONDON, Dec 18 : MSCI's global equities gauge rose on Thursday after four days of losses, but Treasury yields dipped after soft U.S. inflation data raised investors' hopes about more Federal Reserve rate cuts.
Meanwhile, memory chip maker Micron Technology's strong results helped to reinvigorate Wall Street's "rollercoaster" sentiment around artificial intelligence stocks.
U.S. consumer prices increased less than expected in the year to November, with the Consumer Price Index rising 2.7 per cent year-on-year versus economists' forecast of 3.1 per cent, leading to some choppy trading in the dollar as investors also digested updates from UK and European policymakers.
After Wednesday's technology sector selloff driven by worries about AI-inflated valuations, Micron's blowout forecast provided some reassurance, sending its shares up 10 per cent and other heavyweight U.S. tech stocks higher.
Garrett Melson, portfolio strategist at Natixis Investment Managers, said Micron's news was "helping to at least stabilise some of the sentiment around AI, which has been a rollercoaster."
"It's this kind of back and forth between skepticism and real confidence. Today we're back on the confidence side of things," he said.
On Wall Street, the Dow Jones Industrial Average finished up 65.88 points, or 0.14 per cent, at 47,951.85. The S&P 500 rose 53.33 points, or 0.79 per cent, to 6,774.76, with technology providing the biggest boost to the benchmark.
The Nasdaq Composite advanced 313.04 points, or 1.38 per cent, to 23,006.36.
U.S. INFLATION DATA COULD SET STAGE FOR RALLY
Although the U.S. inflation data was "compromised" by collection and release delays due to the 43-day government shutdown through October into mid-November, Mark Luschini, chief investment strategist at Janney Montgomery Scott, said it "still gives some indication that perhaps prices continue to decelerate."
"Today's inflation report set the stage for a rally in stock prices that had been somewhat downtrodden over the last week or so," Luschini said.
"This is a seasonably favorable time of the year for stock prices so the bias tends to be good news being treated as really good news," he added.
The Fed, which has been balancing labour market weakness with still elevated inflation, has signalled only one rate cut next year but traders have been betting on two and estimates were little changed after Thursday's data.
U.S. President Donald Trump said late on Wednesday the next Fed chair, replacing Jerome Powell in May, would be someone who believed in lowering rates "by a lot."
MSCI's gauge of stocks across the globe rose 6.13 points, or 0.62 per cent, to 1,001.18. Earlier, the pan-European STOXX 600 index closed up 0.96 per cent.
In currencies, the dollar recovered earlier losses as investors digested the inflation data.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06 per cent to 98.44.
The euro was down 0.13 per cent at $1.1724 after the European Central Bank kept euro zone rates unchanged as expected and struck a more upbeat tone on the economy.
Against the Japanese yen, the dollar weakened 0.07 per cent to 155.56 ahead of the Bank of Japan's expected rate hike on Friday.
Sterling strengthened 0.02 per cent to $1.3378 after the Bank of England cut interest rates but signalled limited scope for further easing.
In the bond market, the yield on benchmark U.S. 10-year notes fell 3.1 basis points to 4.12 per cent, from 4.151 per cent late on Wednesday, while the 30-year bond yield fell 2.8 basis points to 4.7999 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.5 basis points to 3.46 per cent, from 3.485 per cent.
In energy markets, oil prices settled slightly higher as investors assessed the likelihood of further U.S. sanctions against Russia and the supply risks posed by a blockade of Venezuelan oil tankers.
U.S. crude settled up 0.38 per cent, or 21 cents, at $56.15 a barrel and Brent settled at $59.82 per barrel, up 0.23 per cent, or 14 cents, on the day.
Gold prices edged down as markets digested softer-than-expected U.S. inflation data, reducing the safe-haven's appeal as an inflation hedge, though a higher November unemployment rate, announced on Wednesday, limited losses.
Spot gold fell 0.2 per cent to $4,332.32 an ounce. U.S. gold futures fell 0.27 per cent to $4,335.80 an ounce.
