Thursday brought the kind of news investors have been waiting for: inflation is actually cooling down, and it's happening faster than anyone expected. U.S. stocks responded enthusiastically, with the Nasdaq Composite gaining more than 200 points as traders digested data suggesting the Federal Reserve might keep its easing cycle intact well into 2026.

By midday, the Dow had climbed 0.44% to 48,097.08, while the Nasdaq jumped 1.08% to 22,938.56. The S&P 500 wasn't far behind, rising 0.76% to 6,772.76. It's the kind of broad-based rally that happens when market sentiment shifts from anxious to optimistic.

Inflation Takes a Welcome Detour

The real story Thursday was inflation, or more precisely, the lack of it. The Consumer Price Index rose 2.7% year-over-year in November 2025, according to the Bureau of Labor Statistics. That's a meaningful drop from September's 3% pace and, more importantly, it came in well below the 3.1% economists were expecting.

This matters because it gives the Federal Reserve room to breathe. When inflation cools this convincingly, it strengthens the case for keeping interest rates lower for longer. Investors clearly liked what they saw, bidding up stocks across the board as concerns about persistent price pressures took a back seat.

Sector Performance: Discretionary Wins, Energy Loses

Consumer discretionary shares led the charge Thursday, climbing 2% as investors rotated into stocks that benefit from lower rates and confident consumers. On the flip side, energy stocks fell 0.5%, making it the only major sector in the red for the session.

Individual Stock Standouts

While the broader market moved higher, some individual names posted dramatic swings that deserve attention.

Athira Pharma Inc (ATHA) absolutely exploded, shooting up 84% to $7.62 after announcing it has entered into an agreement to acquire the rights for the development and commercialization of lasofoxifene. That's the kind of move that happens when a biotech lands a potentially valuable asset.

Trump Media & Technology Group Corp (DJT) surged 29% to $13.47 following news that the company signed a merger agreement with TAE Technologies. Merger announcements tend to create excitement, and this one was no exception.

FuelCell Energy Inc (FCEL) gained 32% to $10.47 after reporting better-than-expected fourth-quarter financial results. When companies beat expectations, especially in challenging sectors like alternative energy, investors take notice.

Not everyone had a good day, though. Insmed Inc (INSM) dropped 16% to $166.17 after announcing its Phase 2b BiRCh study of brensocatib in patients with chronic rhinosinusitis without nasal polyps failed to meet its primary or secondary efficacy endpoints in either the 10 mg or 40 mg treatment arms. Clinical trial failures are brutal for biotech stocks, and this was no exception.

Pyxis Oncology Inc (PYXS) plunged 55% to $1.52 after releasing preliminary data from its ongoing Phase 1 clinical studies evaluating micvotabart pelidotin. The market clearly didn't like what it saw in those results.

Actelis Networks Inc (ASNS) fell 47% to $0.59 after announcing the pricing of its $5 million public offering of 6.25 million shares or pre-funded warrants with 6.25 million five-year warrants at $0.80. Dilutive offerings tend to punish existing shareholders, and this one certainly did.

Commodities and Global Markets

In commodity markets, oil traded up 1% to $56.47, while gold edged down 0.2% to $4,365.60. Silver fell 1.9% to $65.640, though copper managed a modest 0.1% gain to $5.4360.

European markets closed higher across the board. The eurozone's STOXX 600 gained 0.56%, Spain's IBEX 35 Index rose 0.60%, and London's FTSE 100 added 0.17%. Germany's DAX 40 climbed 0.48% while France's CAC 40 gained 0.47%.

Asian markets were more mixed. Japan's Nikkei fell 1.03%, while Hong Kong's Hang Seng gained 0.12%, China's Shanghai Composite rose 0.16%, and India's BSE Sensex dipped 0.09%.

Other Economic Data

Beyond the inflation report, Thursday brought additional economic updates. The Philadelphia Fed Manufacturing Index declined 8.5 points to a reading of -10.2 in December, compared to -1.7 in November and missing market estimates of -3.1. That's not great news for manufacturing sentiment.

On the labor front, U.S. initial jobless claims fell by 13,000 from the previous week to 224,000 in the week ending December 13, suggesting the job market remains relatively healthy despite broader economic uncertainties.