US STOCKS-Wall St gains as markets take easing inflation in stride, Micron leads tech rally

By Johann M Cherian and Shashwat Chauhan

Dec 18 (Reuters) - Wall Street's main indexes climbed on Thursday as a soft inflation reading kept alive chances of interest rate cuts by the Federal Reserve, while chipmaker Micron's blowout forecast assuaged some worries about tech sector valuations.

U.S. consumer prices increased less than expected in the year to November, while the Labor Department's Bureau of Labor Statistics did not publish month-to-month CPI changes after the 43-day shutdown of the government prevented the collection of October data.

"The November CPI was much lower than expected ... this is likely to raise questions over certain adjustments statisticians had to make given the lack of the October data," said Art Hogan, chief market strategist at B. Riley Wealth.

"All told this is a positive report, that comes with an asterisk."

Concerns lingered that the data could be distorted, similar to the official jobs report that was released earlier this week. A jobless claims report showed new applications fell last week, reversing the prior week's surge and suggesting labor market conditions remained stable in December.

Futures on the federal funds rate factored in a slightly increased probability of a January rate cut, betting on about 64 basis points of easing in 2026, according to LSEG data.

The Russell 2000 smallcap index .RUT jumped 1.2%. Smallcap companies are particularly rate-sensitive.

At 09:37 a.m. ET, the Dow Jones Industrial Average .DJI rose 294.04 points, or 0.61%, to 48,180.01, the S&P 500 .SPX gained 61.71 points, or 0.92%, to 6,783.14 and the Nasdaq Composite .IXIC gained 295.09 points, or 1.29%, to 22,988.41.

Nine of the 11 S&P sectors were trading higher, with consumer discretionary .SPLRCD and communication services .SPLRCL up more than 1% each.

Leading the way among tech stocks was Micron Technology MU.O, which rose 15.5% after forecasting quarterly profit at nearly double what analysts were expecting on strong artificial intelligence-related demand.

Other memory companies including SanDisk SNDK.O and Western Digital WDC.O also surged, while the Philadelphia SE Semiconductor Index .SOX climbed 2.8%.

Tech stocks were regaining some ground after declines on Wednesday, when uncertainty over Oracle's ORCL.N funding plans for a Stargate data center sent the S&P 500 and the Nasdaq .IXIC to three-week lows.

Still, the reprieve from Micron's earnings is likely to be brief as traders scour for clarity on how corporates are monetizing AI.

Among others, Lululemon LULU.O gained 5.8% as a report said activist investor Elliott has acquired more than a $1 billion stake in the athletic-wear company.

Birkenstock BIRK.N lost 3.7% after the footwear maker's annual profit forecast missed estimates.

Trump Media & Technology DJT.O jumped 22.8% after the company and fusion power company TAE Technologies said they have agreed to combine in an all-stock deal valued at more than $6 billion.

Investors will watch cannabis companies as Trump is expected to address potential easing of marijuana regulations on Thursday. The AdvisorShares Pure U.S. Cannabis ETF MSOS.P was last up 7.3%.

Advancing issues outnumbered decliners by a 3.43-to-1 ratio on the NYSE and by a 4.09-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and no new lows, while the Nasdaq Composite recorded 42 new highs and 40 new lows.