November CPI Rises 2.7%, Down from 3% in September
Despite Possible Data Distortions, 'Fed Put' Expectations Grow
Micron's Strong Earnings Lead Rebound in AI-Related Stocks
On December 18 (local time), all three major U.S. stock indices on the New York Stock Exchange are showing gains. With last month's inflation data coming in below market expectations, hopes are rising for a more accommodative monetary policy next year. Additionally, Micron's strong earnings are helping lead a rebound in technology stocks, which had fallen the previous day due to the 'Oracle shock.'
On the 17th (local time), traders are working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News
As of 11:47 a.m. on the same day at the New York Stock Exchange, the Dow Jones Industrial Average, which is focused on blue-chip stocks, is up 387.12 points (0.81%) from the previous trading day, standing at 48,273.09. The S&P 500 Index, which tracks large-cap stocks, has risen 87.16 points (1.3%) to 6,808.59, while the Nasdaq Index, which is centered on technology stocks, is up 441.23 points (1.94%) to 23,134.553.
Inflationary pressures eased last month. According to the U.S. Department of Labor, the Consumer Price Index (CPI) for November 2025 rose 2.7% year-on-year. This is lower than both the market forecast of 3.1% compiled by Dow Jones and the previous figure for September (3.0%). The CPI for October was not released due to the temporary government shutdown.
The core CPI, which excludes the volatile energy and food sectors, rose 2.6% year-on-year. This result is also below both the market expectation and the September figure (each at 3.0%), marking the lowest level since early 2021.
However, as data collection was suspended in October due to the federal government shutdown, the November CPI was also released in an incomplete state. As a result, some caution remains, as it is difficult to definitively conclude that the inflation slowdown trend has fully taken hold, given that the price trend compared to October cannot be confirmed. Nevertheless, with the November inflation rate slowing much more than expected, there are projections that the Federal Reserve (Fed) may strengthen its policy stance toward prioritizing labor market stability.
Seema Shah, Managing Director and Chief Global Strategist at Principal Asset Management, analyzed, "With the November inflation rate coming in below expectations, the dovish members within the Fed now have a strong case for a rate cut in January. While it is only a single month's data and the possibility of distortion cannot be ruled out, the sharp annual drop in inflation leaves the Fed with little justification for not responding to rising unemployment."
According to CME FedWatch, the interest rate futures market still sees the probability of a rate cut in January next year at less than 30%, but the probability of a cut in March is being reflected at nearly 60%.
U.S. Treasury yields are also weakening on expectations of monetary easing. The yield on the 10-year U.S. Treasury note, the global benchmark for bond yields, stands at 4.11%, unchanged from the previous day, while the yield on the 2-year Treasury note, which is sensitive to monetary policy, is at 3.46%, down 3 basis points and 2 basis points, respectively, from the previous day (1 basis point = 0.01 percentage point).
Tom Lee, Head of Research at Fundstrat, stated, "A moderate CPI trend will further strengthen the Fed's focus on protecting the labor market. This means that the 'Fed put' (stock price increases resulting from the Fed's accommodative monetary policy) is at work in the economy." He added, "If the Fed is concerned about downside risks to the economy, the Fed put will kick in, which could lead to a rise in the stock market."
The employment indicators were relatively positive. According to the U.S. Department of Labor, the number of new unemployment claims for the week of December 7-13 was 224,000. This is a decrease of 14,000 from the previous week (237,000) and matches the market expectation of 224,000. The number of continuing unemployment claims for those who have applied for benefits for more than two weeks was 1,897,000 for the period from November 30 to December 6, which is higher than the previous week (1,830,000) but lower than the market forecast of 1,930,000.
Micron's 'surprise earnings' are also supporting the stock market. The previous day, Micron announced that for the first quarter of fiscal year 2026 (September to November 2025), it recorded revenue of $13.64 billion and adjusted earnings per share (EPS) of $4.78. These figures exceeded market expectations of $12.95 billion and $3.95, respectively. The outlook for the second quarter also surpassed market consensus. Technology stocks, which had plunged the previous day due to concerns over an artificial intelligence (AI) bubble following reports of Oracle's difficulties attracting data center investment, are rebounding thanks to Micron's strong performance.
By stock, Micron is soaring 12.1% on its strong results. Oracle, after dropping 5.4% the previous day, is up 1.99%. Broadcom and AMD are up 0.53% and 2.96%, respectively. Nvidia is rising 2.87%.
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