Wall Street Rallies: Inflation Data Spurs Interest Rate Optimism

Wall Street is set for a higher open after inflation data came in lower than expected, raising hopes for interest rate cuts by the Federal Reserve. Tech stocks, particularly Micron, saw gains. Traders await further economic data ahead of the Fed's January meeting amid speculation of future rate cuts.

Wall Street's major indexes are poised for a positive open Thursday following inflation data that fell short of projections, igniting anticipation for additional interest rate reductions by the Federal Reserve. A Labor Department report indicated a 2.7% annual rise in the Consumer Price Index (CPI) as of November, contrasting with economists' forecast of a 3.1% increase.

The core CPI, minus food and energy, rose 2.6% against expectations of 3.0%. Analysts are investigating potential distortions from the recent government shutdown. In parallel, new jobless claims hit 224,000 for the week ending December 13, aligning closely with an anticipated 225,000. Brian Jacobsen, Annex Wealth Management's chief economic strategist, noted that the Federal Reserve may consider the unemployment uptick and tempered inflation for future rate decisions.

Traders have intensified expectations for a January rate cut, pricing in around 60 basis points for the coming year. Earlier, Dow E-minis gained 262 points, S&P 500 E-minis rose 56.25 points, and Nasdaq 100 E-minis increased by 351 points. Micron Technology posted a 14.5% rise after projecting artificial intelligence-driven profit nearly double estimates, highlighting optimism in tech stocks amid broader market rate sensitivity.

(With inputs from agencies.)