S&P 500 Climbs as Cooling Inflation Lifts Rate-Cut Hopes and Tech Shares

US stocks jumped at the opening bell, rebounding from a steep selloff in the previous session, as a softer-than-anticipated inflation report revived expectations that the Federal Reserve may have room to deliver additional interest-rate cuts. Improved sentiment in the technology sector added to the early momentum, helping lift broader markets after several days of pressure.

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The S&P 500 Index climbed about 1% at the start of Thursday’s trading, putting the benchmark on track to end a four-session losing streak. The move marked a sharp reversal from Wednesday’s declines, when concerns over persistent inflation and restrictive monetary policy weighed heavily on risk assets.

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Investor confidence was buoyed by fresh inflation data that came in below forecasts, easing fears that price pressures were reaccelerating. The report reinforced the view that inflation is continuing to trend lower, strengthening the case for the Federal Reserve to maintain a more accommodative stance later this year. For markets that have been highly sensitive to macroeconomic signals, the data provided a welcome shift in tone.

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Rate-sensitive sectors responded quickly. Treasury yields edged lower, reflecting renewed bets that the central bank could cut rates sooner or more aggressively than previously expected. Equity investors, in turn, leaned into growth-oriented names, particularly in technology, which tend to benefit most from lower borrowing costs and improving liquidity conditions.

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Technology stocks played a leading role in the early rally, helped by a combination of easing inflation concerns and upbeat corporate outlooks. Optimism around artificial intelligence, memory chips, and data-center spending continued to underpin the sector, offering a counterweight to broader economic uncertainty.

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Micron Technology Inc. stood out as the top performer in the S&P 500 after the chipmaker delivered a bullish forecast. The company said it is benefiting from strong demand and tight supply conditions, allowing it to command higher prices for its products.

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That outlook reinforced confidence that parts of the semiconductor industry are entering a new upcycle, driven by AI-related investments and improving fundamentals.

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Micron’s commentary had a ripple effect across the chip sector, lifting shares of other semiconductor makers and suppliers. Investors interpreted the company’s pricing power as a sign that inventory challenges are easing and that demand is beginning to outpace supply once again, particularly in memory markets that had been under pressure in recent years.

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Beyond technology, the broader market also found support as investors reassessed the outlook for monetary policy. The cooler inflation reading suggested that the Federal Reserve’s tightening campaign may be having the intended effect, reducing the risk that rates will need to remain elevated for an extended period. That shift in expectations helped improve risk appetite across multiple sectors.

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The rally followed a volatile stretch for equities, during which markets struggled to find direction amid conflicting economic signals. Recent sessions were marked by sharp swings as traders reacted to inflation data, central bank commentary, and concerns about the pace of economic growth. Thursday’s opening gains suggested that investors were willing to reengage after Wednesday’s selloff appeared overdone.

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Still, some caution remains. While the latest inflation report was encouraging, policymakers have repeatedly stressed the need for sustained progress before declaring victory. Federal Reserve officials are likely to continue emphasizing data dependency, meaning upcoming reports on employment, consumer spending, and prices will remain critical in shaping market expectations.

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For now, the focus has shifted back to whether the central bank can engineer a soft landing—cooling inflation without triggering a significant economic slowdown. The resilience of corporate earnings, particularly in technology, has helped support that narrative, even as other sectors face margin pressure and slower growth.

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Market participants will also be watching whether Thursday’s rebound has staying power. After several days of losses, some of the early buying may reflect short covering or bargain hunting rather than a decisive shift in sentiment. Sustained gains will likely depend on continued evidence that inflation is moving in the right direction and that economic activity remains stable.

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As the session unfolds, investors are expected to remain highly responsive to both macroeconomic developments and company-specific news. With inflation showing signs of moderation and select industries delivering upbeat outlooks, the balance of risks appears more favorable than it did just a day earlier.

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For equity markets, the early rally underscored a familiar theme: when inflation cools and rate-cut hopes resurface, risk assets tend to respond quickly. Whether that momentum can carry forward will hinge on the data still to come—and on the Federal Reserve’s willingness to follow through if the economic backdrop continues to cooperate.

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