Stocks rise, Treasury yields edge down as US inflation softens

By Sin?ad 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 (MU) 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 Sin?ad Carew in New York, Amanda Cooper in London and Stella Qui in Sydney; Editing by Jane Merriman, Nick Zieminski and Jamie Freed)