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Market Wrap

Markets cheer surprise gift of cooler CPI amid renewed AI optimism to finish higher

The S&P 500, Nasdaq 100, and Russell 2000 surged on Thursday — perhaps we’ll have a Santa rally after all!

After a string of dismal trading days, US stocks soared on a sack full of good news that reversed this week’s downward trend and made visions of a Santa Claus rally dance in traders’ heads.

Micron’s earnings report after the bell Wednesday absolutely smashed all expectations, lifting a trove of tech stocks with it as the AI trade lit back up. OpenAI reportedly getting its hands on more money also boosted AI optimism. All of the Magnificent 7 rose as well as Bloom Energy, Cipher Mining, POET Technologies, CoreWeave, IREN, and Nebius.

Investors also cheered this morning’s inflation data, which came in well below economists’ expectations, with annual core CPI inflation falling to its lowest level since March 2021, offering fresh justification for the interest rate cuts already delivered by the Federal Reserve and prompting traders to bet on the prospect of more to come.

The S&P 500, Nasdaq 100, and Russell 2000 all celebrated cheery gains.

Stocks that moved higher:

Trump Media surged after announcing it’s merging with fusion energy company TAE Technologies.
Rivian climbed after it rolled out a “universal hands-free” update and scored an upgrade from Baird.
Utilities with a footprint in the country’s largest power grid, such as Talen Energy, Constellation Energy, and Vistra, spiked after prices set in a key auction hit a record high.

Stocks that moved lower:

President Trump signed an executive order directing agencies to reschedule marijuana as a less dangerous drug, which sank shares of Canadian cannabis companies like Tilray, Canopy Growth, Cronos Group, and SNDL Inc.. The AdvisorShares Pure US Cannabis ETF, the benchmark ETF for publicly traded US cannabis companies, plunged as investors treated it as a “sell the news” event.
Used car retailer CarMax sank following the company’s third-quarter earnings report, which showed its used car sales had declined.
Instacart slumped following a report that the FTC is probing its AI pricing tool.
Coinbase rose after announcing it was entering into prediction markets and stock trading, but lost those gains by the close.

CAMARILLO, CA FEBRUARY 09: A cannabis farm worker de-leafs cann

Trump signs executive order expediting reclassification of marijuana as a less dangerous drug

Rescheduling would lift regulatory pressures that have been weighing on US cannabis operators’ margins. Shares of weed companies, many of which don’t sell cannabis in the US, tumbled an hour before the executive order was signed.

J. Edward Moreno5h

Max Knoblauch6h

Rivian climbs as it rolls out a “universal hands-free” update and scores an upgrade from Baird

Shares of EV maker Rivian are on pace for their 10th best day of 2025 on Thursday, following an upgrade from Baird to “buy” from “hold” and the rollout of its new hands-free driving update.

Baird raised its price target on Rivian nearly 79% to $25, writing that “2026 is the year of R2.”

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Despite referring to it as “universal hands-free” driving, the EV maker says the feature will not stop or slow for traffic lights or stop signs, follow navigation systems, or make turns, and will function only on roads with visible lane lines.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Rivian rolls out new 'Universal Hands-Free' driving feature | TechCrunch

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Matt Phillips8h

The stock market loves your rising electricity bill

Utilities with a footprint in the massive PJM Interconnection, the country’s largest power grid, were up Thursday after prices set in a key auction hit a record high of $333.44 per megawatt-day.

Such power providers, including Talen Energy, Constellation Energy, and Vistra, saw tidy gains shortly before midday.

“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, set to become PJM’s chief operating officer next month, told Reuters.

As I’ve previously mused, political pushback from high power prices, partially created by the AI boom, could become a constraint on development of such sites. Democrats in the US Senate are now calling for hearings on the issue.

It’s fertile political soil. This morning’s US CPI report for November showed electricity prices up nearly 7% year over year, the highest since the tail end of the postpandemic inflation in April 2023.

Costs on Key US Grid Hit New Record, Testing Affordability

Luke Kawa8h

Micron’s earnings, soft inflation, and OpenAI valuation chatter revive speculative AI trade

The three biggest news events since markets closed yesterday are all helping spur a big bounce-back for the more speculative companies tied to AI:

Micron’s eye-popping Q2 guidance reaffirmed beyond a shadow of a doubt how hot AI demand continues to run in the near term.
While the data is undoubtedly messy, core CPI inflation decelerated by much more than anticipated in November. Lower rates are a clear positive for more marginal companies levered to the AI theme, whose stocks trade with a higher embedded risk of default and whose bonds have also been suggesting more credit risk as of late.
OpenAI reportedly getting its hands on more money (and commanding a higher valuation in the process) provides some semblance of valuation support for these firms and also a better fundamental foundation as well: more cash in CEO Sam Altman’s pockets means more cash he has to make good on commitments to OpenAI’s many suppliers.

Put together, the key news items since Wednesday’s close are producing massive gains for the likes of Bloom Energy, Cipher Mining, POET Technologies, CoreWeave, IREN, and Nebius.

Matt Phillips9h

GE Vernova upped to “buy” at Jefferies

GE Vernova is up early, enjoying the benefits of both a rebound in the AI data center trade and an upgrade to “buy” from analysts at Jefferies. In a note published on Thursday, they wrote:

“We upgrade to Buy. More positive on the outlook for Power (gas pricing & services visibility) and electrification yet shares are down since the December 9th Analyst Day. $815 PT up from $736. Gas turbine pricing continues to positively surprise and services provides visibility deeper into the 2030s, eventually offsetting gas equipment weakness.”

The target is slightly above the FactSet consensus price target of $753 on the stock, and implies a 23% premium to GE Vernova’s closing price on Wednesday. The stock is up almost 100% in 2025.