Soft CPI, Strong Micron Bring Dual Jolt Post Slump

Published as of: December 18, 2025, 9:15 a.m. ET

(Thursday market open) Softer-than expected November U.S. consumer price growth gave Wall Street an early boost Thursday and may provide the Federal Reserve more runway for rate cuts. The November Consumer Price Index (CPI) rose 2.7% year over year—down from the previous year-over-year increase of 3%—and edged up 0.2% from September. Core CPI excluding food and energy rose 2.6% year over year and 0.2% from September. Analysts had expected 3% annual core and headline growth and 0.3% monthly growth, though there was no October data due to the shutdown.

"This report was a step in the right direction," said Collin Martin, head of fixed income research and strategy, Schwab Center for Financial Research (SCFR). "Although the report was incomplete given the government shutdown, the year-over-year changes in both headline and core CPI came in well below expectations. We'll want to see more complete data over the next few months to confirm this trend, but it should alleviate the concerns for some of the Fed officials who have been worried about inflation's stickiness. This doesn't change our view of a pause in rate cuts in January, but more data like this could pull forward the timing of the next cut."

The S&P 500 index finished down for the fourth straight session Wednesday and lost hold of the 50-day moving average near 6,765. That level could continue to be a measuring stick for the bulls. Tech hit the skids again Wednesday, with Oracle (ORCL) in a deep freeze, down 5% after Bloomberg reported that Blue Owl Capital, a partner in Oracle's AI infrastructure build-out, isn't contributing equity. This raised new concerns about debt funding for AI projects. Chip shares fell nearly 4% Wednesday, but robust earnings from Micron (MU) after the close powered its shares to double-digit gains overnight and injected missing vigor.

1. BOJ rate decision could clip Treasuries: The European Central Bank's (ECB) decision to hold rates steady came as no surprise and might not have much initial impact, though the ECB did raise economic growth forecasts, which could have rate implications down the road. Possibly more meaningful for U.S. markets is the Bank of Japan's (BOJ) expected rate hike early Friday. This could help explain why U.S. long-term Treasury yields remained elevated despite the Fed's dovish policy, putting pressure on stocks, though the 10-year yield fell after CPI today. A BOJ rate hike means investors there might pull out of U.S. investments to put their money to work at home. When this happened in mid-2024, it caused a sell-off for info tech stocks, though the set-up now isn't similar. Back then, speculative traders had a large bearish position in the yen that quickly reversed, which isn't the case today. "Global yields are mixed, with Japan's government bonds heading toward 2% while other country bonds are easing," said Kathy Jones, chief fixed income strategist, SCFR.
    
2. Final fling for earnings as Nike, FedEx report: Reporting continues after today's close from consumer giants FedEx (FDX) and Nike (NKE). Both bring important updates on demand during the lead-up to holiday season. FedEx is also a key barometer for business health. Nike, on the other hand, can send messages about how U.S. products are faring in China after a year filled with trade skirmishes and tariffs. China's recent weak economic data have some participants worried about growth there. Conagra (CAG) reports tomorrow after a tough year for packaged food makers amid changing consumer trends. And that about wraps up 2025 earnings. Stay tuned, though, because fresh fourth quarter results begin soon after the holidays, starting with big banks. There's a lot of positive analyst sentiment around financials now due partly to the favorable yield curve, fiscal policy changes starting in 2026, and possible strength in the initial public offering (IPO) and merger environments amid favorable regulatory conditions. Medline (MDLN) became one of the biggest IPOs in recent years Wednesday, raising more than $6.2 billion, Barron's reported.
    
3. Micron gives chips a lift: Micron rose 13% ahead of the open after earnings and revenue easily topped consensus views and fiscal second quarter guidance left analysts' consensus far behind. The high-bandwidth memory chips Micron makes are used in AI data centers, meaning it is an AI barometer, and demand for those chips helped boost Micron's results. After the report, Micron received an upgrade to buy from Bank of America (BAC), which previously rated the company neutral. Stocks associated with chips and AI, including Intel (INTC), ASML (ASML), Broadcom, Marvell Technology (MRVL), Constellation Energy (CEG), Palantir (PLTR), and Nvidia (NVDA), all rose 1% or more ahead of the open, lifted in part by the Micron news. But one day isn't necessarily going to change the overall pattern of investors moving out of tech and into other sectors, something evident in the fact that 63% of S&P 500 stocks have outperformed the index over the last month even as the market cap-weighted index itself has fallen. "Rotation is still underway as many AI-related stocks correct," said Liz Ann Sonders, chief investment strategist, SCFR.

GE Vernova (GEV) climbed 4% in early trading after an upgrade to buy from hold by Jefferies, which cited optimism around gas pricing and the outlook for electrification.
 

Rivian (RIVN) climbed 3.5% early today after getting upgraded to outperform by Baird, which previously had a neutral rating. The firm said 2026 will be the year of the R2 launch. That vehicle is an electric five-seat SUV expected to be priced starting at $45,000.
 

Lululemon (LULU) climbed 7% ahead of the open on news that Elliott Investment Management has accumulated a stake of more than $1 billion in the company, the Wall Street Journal reported. Elliott is also bringing a potential CEO candidate to the struggling athletic apparel maker in an attempt to turn the company around, the newspaper said. Lululemon announced last week that its CEO will step down in January.
 

Lennar (LEN) fell another 2% in the pre-market hours after receiving several downgrades from analysts following its earnings and guidance, which some called weak. They also cited soft market conditions for homebuilders.
 

CarMax (KMX) shares fell 7% early Thursday. The used car firm topped earnings and revenue estimates but said it plans to reduce margins on used cars, Barron's noted.
 

Tesla's (TSLA) rally stalled after the automaker's recent all-time highs. Shares fell 4.6% Wednesday but rebounded more than 1% this morning.
 

Bitcoin futures (/BTC) advanced roughly 3% early Wednesday, helping lift crypto-related names in the stock market. Bitcoin still trades near recent lows, but today's early strength could reflect risk-on sentiment.
 

Coinbase Global (COIN) climbed 2.7% ahead of the open after it announced a partnership with prediction markets specialist Kalshi, the Wall Street Journal reported.
 

After today's CPI, chances of a Fed rate cut in January were 26%, and March odds stayed above 50%, according to the CME FedWatch Tool. "Comments from various Fed officials show there is still a wide range of views," my colleague Jones said. "Our long-term outlook continues to be one to two rate cuts in 2026 and a steeper yield curve with upward pressure on ten-year yields as the Fed eases due to rising fiscal deficits and inflation concerns."
 

Though the stock market suffers from lack of tech leadership, the S&P 500 index is still up a solid 14% year-to-date and around 3% from the November 20 low close of 6,538. The 100-day moving average near 6,633 might be a level to watch on any deeper dives, while the November low also could represent a support point.

A guide to FSAs: An FSA, or Flexible Spending Account, is a tax-advantaged account offered by employers. It allows you to use pre-tax money to pay for qualified medical expenses, reducing your taxable income and out-of-pocket healthcare costs. Learn more about the potential benefits and risks of FSAs in Schwab's latest financial planning article.

In just a week, the PHLX Semiconductor Index (SOX–candlesticks) has fallen about 10%, the market definition of a correction. This comes as investors increasingly worry about debt-related financing for AI stocks. Broadcom and Nvidia are two of the worst performers in the sector since a week ago, and the Relative Strength Index for SOX is now around 40, down from above 60 on December 10 and not far above what are considered oversold conditions down near 30.

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

December 19: Final December University of Michigan consumer sentiment and expected earnings from Paychex (PAYX), Lamb Weston (LW), and Conagra (CAG).

December 22: No major earnings or data expected.

December 23: October durable goods orders, third quarter GDP—second estimate, and November new home sales.

December 24: No major earnings or data expected; U.S. markets close at 1:00 p.m. ET.

December 25: Markets closed for Christmas.