S&P 500, Nasdaq Rally On Cool Inflation Report As These AI Leaders Bounce

Beaten down artificial intelligence stocks led a market advance Thursday, as the S&P 500 and the Nasdaq composite rebounded sharply following cooler-than-expected inflation data and strong earnings results from Micron Technology (MU). AI stocks like Nvidia (NVDA), Palantir Technologies (PLTR) and Tesla (TSLA) bounced.

Blue chips on the Dow Jones Industrial Average rose 0.1%, or 65 points, while the S&P 500 gained 0.8%. Both snapped four-day losing streaks. Meanwhile, the Nasdaq climbed 1.4%, while the small-cap Russell 2000 moved up 0.6%.

The S&P 500’s consumer discretionary and communication services sectors were the index’s biggest winners, while the energy and consumer staples sectors were its biggest laggards. Volume dropped on the Nasdaq and the New York Stock Exchange compared with Wednesday’s trading day, taking away from the day’s bullishness.

Early Thursday, the consumer price index data for November showed much lower core inflation.

The CPI report was an unusual one because of the government shutdown. The Bureau of Labor Statistics didn’t collect October price data amid the shutdown. So markets were focused on the 12-month inflation rate — particularly core inflation, which excludes food and energy.

After the CPI data, futures markets were pricing in 27% odds of a Jan. 28 rate cut. Odds of a rate cut by the March 18 Fed meeting rose slightly to around 58%.

In the bond market Thursday, the 10-year Treasury yield dropped dropped to 4.11%.

Dow Jones Index Winners And Losers

Inside the Dow Jones 30 index on Thursday, Amazon (AMZN) and Merck (MRK) were among the top performers, with gains of 2.6% and 1.5%, respectively.

On the Dow’s downside, UnitedHealth Group (UNH) and Procter & Gamble (PG) were losers, down more than 1% apiece. In the Nasdaq-100 index, Palantir and AppLovin (APP) climbed 2.8% and 5.7%, respectively, making them two of the best stocks of the day. On the downside, Diamondback Energy (FANG) tumbled 4.6%, closing at its 50-day moving average.

All of the Magnificent Seven stocks ended the session higher, leaving the Roundhill Magnificent Seven (MAGS) exchange traded fund up 2%. Nvidia rebounded 1.9%. Tesla shares raced up 3.5% to retake the latest entry at 474.07.

The Innovator IBD 50 ETF (FFTY) climbed 1.9%. At the same time, Investor’s Business Daily’s IBD 50 list had several big movers in the session, including Micron, AppLovin and Lemonade (LMND).

S&P 500 And Nasdaq Rebound: What To Do Now

Despite solid gains Thursday, Investor’s Business Daily maintained its recommended exposure level at 60% to 80%. The S&P 500 was able to close back above its 50-day moving average, but the Nasdaq remains below that key level.

The Nasdaq’s Nov. 12 distribution day fell off the count, reducing its count to six. The S&P’s count remains at five.

Amid the ongoing market volatility, investors should be flexible within the exposure range to be in sync with the stock market’s health. Continue to maintain watchlists of emerging leadership. Previous tech leaders have suffered substantial damage and will require time to recover.

IBD MarketSurge’s Breaking Out Today list featured just one new stock Thursday, which makes sense given the recent market weakness. Namely, Reddit (RDDT) attempted a breakout above a 240.18 entry, but closed below it. The Near Pivot list grew to 13 ideas. Notably, KLA (KLAC) is closing in on a 1,284.47 buy trigger.

GE, Globus And Roku Are Stocks To Watch

In Thursday’s solid action among equity indexes, GE Aerospace (GE), Globus Medical (GMED) and Roku (ROKU) were among key stocks to watch.

GE Aerospace shares regained their 50-day line Thursday, as they form a flat base with a 316.67 entry. An early buy trigger is also in play at 308.06.

IBD Leaderboard stock Globus is building a giant cup with handle that has a 92.47 buy point. Shares closed Thursday about 6% away from their entry.

Finally, Roku stock is rapidly nearing a cup base’s 116.66 entry, according to IBD MarketSurge chart analysis. Bullishly, the stock’s RS line hit a new high, earning it the blue dot.

View the General Market Indicators chart page here.

Be sure to follow Scott Lehtonen on X at @IBD_SLehtonen for more on the Dow Jones Industrial Average and stock market news.

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