New York markets closed sharply higher on Thursday after fresh inflation data showed consumer prices cooling more than expected. The Dow Jones Industrial Average and S&P 500 both ended four-session losing streaks. Gold prices also surged, hitting a new all-time record high.^[1][2][3] The Consumer Price Index (CPI) for November 2025 rose 2.7% year-over-year, surprising economists who had predicted a 3.1% increase.^{[1][4][5][6][7]} Core inflation, which removes volatile food and energy costs, also softened to 2.6%, well below the 3.0% forecast.^{[1][4][5][6][7]} This positive economic news followed a 43-day government shutdown that had delayed the release of October's CPI data, leaving investors with limited recent economic insights.^{[8][9][5][10]} ### Markets Rebound on Rate Cut Hopes Wall Street reacted strongly to the inflation figures. The Dow Jones Industrial Average advanced 0.14%, closing at 47,951.85.^[8][9][5][3] The S&P 500 gained 0.79% to reach 6,774.76, while the tech-heavy Nasdaq Composite led gains with a 1.38% jump, ending the day at 23,006.36.^[8][9][5][3] This broad market rally stemmed from renewed hopes that the Federal Reserve might accelerate interest rate cuts in 2026.^{[8][9][11][12][4][13][6][7]} Bill Merz, head of capital markets research at U.S. Bank's Asset Management Group, noted the constructive CPI report. He said it "starts to ease pressure on policymakers further to potentially get more comfortable cutting rates next year."^[8][9] Traders now see a 58% chance for a dovish policy move by the Fed in March, according to CME's FedWatch Tool.^[8][9] Market participants are pricing in about 63 basis points of rate cuts for the coming year.^[13] ### Gold Reaches New Heights The precious metal market also saw significant action, with gold futures hitting an all-time high above $4,400 an ounce on Thursday.^[1] While futures later slipped slightly to $4,365 by 4 p.m. ET, spot gold continued to trade strongly near $4,335.15 an ounce on Friday, December 19, 2025.^[1][11][13] This surge brings gold close to its previous all-time high of $4,381.21, set in October.^[12][13] The weaker-than-expected inflation data played a key role in gold's ascent. Lower inflation typically strengthens the case for reduced borrowing costs, which benefits non-yielding assets like gold.^[11][14][6] Geopolitical tensions, including President Trump's order to blockade sanctioned Venezuelan oil tankers, also increased demand for safe-haven assets.^[11][14][6] Central banks have also been actively buying gold, further supporting its price rally.^[14][15][16] Peter Grant, vice president and senior metals strategist at Zaner Metals, maintained a bullish outlook, stating, "I've got upside objectives at $4,515.63 and $5,000 is still a valid objective as well."^[12] ### Technology Sector Leads Gains Beyond the inflation data, strong performance in the technology sector contributed to the market's positive day. Consumer discretionary and communication stocks led the broader gains.^[17] Memory chip maker Micron Technology saw its shares soar over 10%.^[8][9][5][3] This jump followed the company's fiscal first-quarter 2026 results and an upbeat forecast, citing strong demand for artificial intelligence (AI) hardware.^[8][9][5][3] Other AI chipmakers like Nvidia and Advanced Micro Devices also rebounded after earlier declines.^[1] Shares of Amazon rose 2.5%, leading the Dow, while Microsoft shares added 1.7%.^[1] The strong showing in tech stocks, often referred to as the "Magnificent Seven," provided significant support to the overall market.^[7] This suggests that while inflation and interest rates remain key drivers, innovation in areas like AI continues to influence investor sentiment. ### Economic Outlook and Federal Reserve's Next Steps The November CPI report, despite being complicated by the recent government shutdown, reinforces the view that inflation is moderating.^[17][2][10] This development is crucial for the Federal Reserve as it navigates its monetary policy decisions. Leo Nelissen, an analyst at Seeking Alpha, commented that "Today's CPI number essentially told the Fed something like, 'You now have the perfect opportunity to cut rates even further if employment keeps weakening.'"^[5] However, some caution remains. Federal Reserve officials have emphasized the need for sustained progress before declaring victory over inflation.^[2] Upcoming reports on employment, consumer spending, and prices will continue to shape market expectations.^[2][7] The Fed had already delivered its third consecutive rate cut last week, but its future pace of easing remains a subject of debate among market analysts.^[11][14] The market's positive reaction to the cooler inflation data suggests that investors are increasingly confident in a "soft landing" for the economy. This scenario involves inflation returning to target without triggering a significant economic downturn. The resilience of corporate earnings, particularly in the technology sector, continues to support this optimistic outlook.^[2]

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