Wall Street’s major indexes closed higher on December 7, 2023, driven by a robust performance in the technology sector and a softer-than-expected inflation report. The Consumer Price Index (CPI) for November indicated that consumer prices rose less than anticipated, alleviating some pressure on the Federal Reserve to maintain interest rates. This development has sparked optimism among investors regarding potential rate cuts in the near future.
The CPI report revealed that inflation remains manageable, although the Labor Department’s Bureau of Labor Statistics did not provide month-to-month CPI changes due to a 43-day government shutdown that hindered the collection of October data. Bill Merz, head of capital markets research at U.S. Bank’s Asset Management Group, noted that the “constructive CPI report” could help policymakers become more comfortable with the idea of reducing rates next year. He emphasized the need for consistent follow-through in upcoming reports to confirm these trends.
Market Rebound and Jobless Claims
After experiencing three consecutive weeks of losses, the three major indexes rebounded. The Russell 2000 index, which tracks small-cap companies sensitive to interest rate changes, also posted gains. A report on jobless claims indicated that new applications fell last week, reversing a prior surge and suggesting stability in the labor market. The U.S. job growth report released earlier this week noted that job growth rebounded in November, while the unemployment rate increased slightly to 4.6%.
Traders are now estimating a 58% likelihood of a dovish policy shift by the Federal Reserve in March, according to the CME’s FedWatch Tool. This expectation contributed to the overall positive sentiment on the trading floor.
Preliminary figures show that the S&P 500 gained 52.48 points, or 0.78%, closing at 6,773.91 points. The Nasdaq Composite rose by 311.60 points, an increase of 1.37%, reaching 23,004.92. Meanwhile, the Dow Jones Industrial Average climbed 69.36 points, or 0.14%, finishing at 47,955.33.
Tech Sector Fuels Gains
The technology sector saw significant gains, with Micron Technology’s stock soaring after the company projected quarterly profits that nearly doubled analysts’ expectations due to strong demand for artificial intelligence products. Other semiconductor firms, including SanDisk and Western Digital, also experienced substantial increases, as reflected in the Philadelphia SE Semiconductor Index.
Consumer discretionary stocks also thrived, particularly Lululemon, which surged following reports that activist investor Elliott Investment Management has acquired a stake worth over $1 billion in the athletic-wear company. Starbucks also saw a notable rally.
Despite these gains, companies’ substantial debt-backed investments in AI development and uncertainties regarding monetization have raised concerns among investors this quarter. Oracle’s stock rebounded after a decline the previous day, which was sparked by funding plans for a new data center.
In another significant development, Trump Media & Technology experienced a sharp increase in its stock price following the announcement of a merger with TAE Technologies, a fusion power company, in a deal valued at over $6 billion.
As Wall Street continues to navigate these dynamic market conditions, investors are keeping a close watch on upcoming economic indicators and corporate earnings reports that could further influence market trends.
