Tamer-Than-Expected Inflation Data Contributes To Rebound On Wall Street

(RTTNews) - After coming under considerable selling pressure over the course of the previous session, stocks showed a strong move back to the upside during trading on Thursday. The tech-heavy Nasdaq led the rebound by the major averages.

The Nasdaq jumped 313.04 points or 1.4 percent to 23,006.36 and the S&P 500 advanced 53.33 points or 0.8 percent to 6,774.76, while the narrower Dow fluctuated before closing up 65.88 points or 0.1 percent at 47,951.85.

The strength on Wall Street came following the release of a closely watched Labor Department unexpectedly showing a slowdown in the annual rate of consumer price growth.

The Labor Department said consumer prices in November were up by 2.7 percent compared to the same month a year ago.

The year-over-year price growth in November reflects a notable slowdown from the 3.0 percent surge in September. Economists had expected the annual rate of growth to tick up to 3.1 percent.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also slowed to 2.6 percent in November from 3.0 percent in September. The pace of core price growth was expected to remain unchanged.

The tamer-than-expected inflation data has led to renewed confidence the Federal Reserve will continue cutting interest rates next year.

"Inflation has lost its grip—and the Fed knows it," said Gina Bolvin, President of Bolvin Wealth Management Group. "Today's CPI print gives the market what it needed: confirmation that disinflation is durable and policy relief is coming."

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits declined roughly in line with economist estimates in the week ended December 13th.

The Labor Department said initial jobless claims fell to 224,000, a decrease of 13,000 from the previous week's revised level of 237,000.

Economists had expected jobless claims to slip to 225,000 from the 236,000 originally reported for the previous week.

Sector News

Semiconductor stocks showed a substantial rebound after falling sharply on Wednesday, resulting in a 2.5 percent surge by the Philadelphia Semiconductor Index.

Micron Technology (MU) helped lead the sector higher, spiking by 10.2 percent after reporting better than expected quarterly results and providing blowout guidance.

Software and networking stocks also saw significant strength on the day, contributing to the jump by the tech-heavy Nasdaq.

Outside of tech sector, airline stocks turned in a strong performances, while energy stocks gave back ground after Wednesday's rally.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Japan's Nikkei 225 Index slid by 1.0 percent, while China's Shanghai Composite Index crept up by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.0 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index advanced by 0.8 percent and 0.7 percent, respectively.

In the bond market, treasuries have moved higher in reaction to the inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.5 basis points to 4.116 percent.