Finance
Stocks rise, Treasury yields edge down as US inflation softens
Published by Global Banking and Finance Review
Posted on December 18, 2025
4 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 18, 2025
4 min readLast updated: January 20, 2026
US inflation data softens, leading to a rise in global stocks and a dip in Treasury yields. Micron Technology's results boost AI stocks, while the dollar sees choppy trading.
By Sinéad Carew and Amanda Cooper
NEW YORK/LONDON, Dec 18 (Reuters) - MSCI's global equities gauge rose on Thursday after four days of losses, but Treasury yields dipped after soft U.S. inflation data raised investors' hopes about more Federal Reserve rate cuts.
Meanwhile, memory chip maker Micron Technology's strong results helped to reinvigorate Wall Street's "rollercoaster" sentiment around artificial intelligence stocks.
U.S. consumer prices increased less than expected in the year to November, with the Consumer Price Index rising 2.7% year-on-year versus economists' forecast of 3.1%, leading to some choppy trading in the dollar as investors also digested updates from UK and European policymakers.
After Wednesday's technology sector selloff driven by worries about AI-inflated valuations, Micron's blowout forecast provided some reassurance, sending its shares up 10% and other heavyweight U.S. tech stocks higher.
Garrett Melson, portfolio strategist at Natixis Investment Managers, said Micron's news was "helping to at least stabilise some of the sentiment around AI, which has been a rollercoaster."
"It's this kind of back and forth between skepticism and real confidence. Today we're back on the confidence side of things," he said.
On Wall Street, the Dow Jones Industrial Average finished up 65.88 points, or 0.14%, at 47,951.85. The S&P 500 rose 53.33 points, or 0.79%, to 6,774.76, with technology providing the biggest boost to the benchmark.
The Nasdaq Composite advanced 313.04 points, or 1.38%, to 23,006.36.
U.S. INFLATION DATA COULD SET STAGE FOR RALLY
Although the U.S. inflation data was "compromised" by collection and release delays due to the 43-day government shutdown through October into mid-November, Mark Luschini, chief investment strategist at Janney Montgomery Scott, said it "still gives some indication that perhaps prices continue to decelerate."
"Today's inflation report set the stage for a rally in stock prices that had been somewhat downtrodden over the last week or so," Luschini said.
"This is a seasonably favorable time of the year for stock prices so the bias tends to be good news being treated as really good news," he added.
The Fed, which has been balancing labour market weakness with still elevated inflation, has signalled only one rate cut next year but traders have been betting on two and estimates were little changed after Thursday's data.
U.S. President Donald Trump said late on Wednesday the next Fed chair, replacing Jerome Powell in May, would be someone who believed in lowering rates "by a lot."
MSCI's gauge of stocks across the globe rose 6.13 points, or 0.62%, to 1,001.18. Earlier, the pan-European STOXX 600 index closed up 0.96%.
In currencies, the dollar recovered earlier losses as investors digested the inflation data.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.06% to 98.44.
The euro was down 0.13% at $1.1724 after the European Central Bank kept euro zone rates unchanged as expected and struck a more upbeat tone on the economy.
Against the Japanese yen, the dollar weakened 0.07% to 155.56 ahead of the Bank of Japan's expected rate hike on Friday.
Sterling strengthened 0.02% to $1.3378 after the Bank of England cut interest rates but signalled limited scope for further easing.
In the bond market, the yield on benchmark U.S. 10-year notes fell 3.1 basis points to 4.12%, from 4.151% late on Wednesday, while the 30-year bond yield fell 2.8 basis points to 4.7999%.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.5 basis points to 3.46%, from 3.485%.
In energy markets, oil prices settled slightly higher as investors assessed the likelihood of further U.S. sanctions against Russia and the supply risks posed by a blockade of Venezuelan oil tankers.
U.S. crude settled up 0.38%, or 21 cents, at $56.15 a barrel and Brent settled at $59.82 per barrel, up 0.23%, or 14 cents, on the day.
Gold prices edged down as markets digested softer-than-expected U.S. inflation data, reducing the safe-haven's appeal as an inflation hedge, though a higher November unemployment rate, announced on Wednesday, limited losses.
Spot gold fell 0.2% to $4,332.32 an ounce. U.S. gold futures fell 0.27% to $4,335.80 an ounce.
(Reporting by Sinéad Carew in New York, Amanda Cooper in London and Stella Qui in Sydney; Editing by Jane Merriman, Nick Zieminski and Jamie Freed)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.
The CPI measures the average change over time in the prices paid by consumers for a basket of goods and services.
The stock market is a collection of markets where shares of publicly held companies are issued, bought, and sold.
The bond market is a financial market where participants can issue new debt or buy and sell existing debt securities.
Explore more articles in the Finance category
