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 report kept alive chances of interest rate cuts by the Federal Reserve, while chipmaker Micron's blowout forecast assuaged some worries about tech sector valuations.

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.

Traders now see a 58% chance for a dovish policy move by the Fed in March, according to CME's FedWatch Tool.

The Russell 2000 index .RUT, tracking rate-sensitive smallcaps, advanced 1.3%.

At 11:27 a.m. ET, the Dow Jones Industrial Average .DJI rose 425.15 points, or 0.89%, to 48,313.11, the S&P 500 .SPX gained 88.89 points, or 1.32%, to 6,810.73 and the Nasdaq Composite .IXIC gained 424.34 points, or 1.88%, to 23,119.07.

Both the S&P 500 and the Nasdaq were set to log their biggest daily gain in over three weeks, rebounding from a three-week low hit on Wednesday.

Nine of the 11 S&P sectors advanced, led by consumer discretionary's .SPLRCD 2.7% gain as Lululemon LULU.O surged 6% on a report that activist investor Elliott has acquired more than a $1 billion stake in the athletic-wear company.

Among heavyweight tech stocks, Micron Technology MU.O jumped 11% 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 3%.

Uncertainty over companies' plans to monetize AI and massive debt-backed spending on developing the technology has plagued risk-taking this quarter.

Oracle ORCL.N climbed 1.8%, recovering from a fall on Wednesday when funding plans for a Stargate data center sparked a broad equities selloff.

Birkenstock BIRK.N lost 9.1% after the footwear maker's annual profit forecast missed estimates.

Trump Media & Technology DJT.O jumped 34.2% 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 President Donald Trump is expected to address potential easing of marijuana regulations on Thursday. The AdvisorShares Pure U.S. Cannabis ETF MSOS.P was last up 4.5%.

Advancing issues outnumbered decliners by a 3.58-to-1 ratio on the NYSE and by a 2.99-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and no new lows, while the Nasdaq Composite recorded 87 new highs and 98 new lows.