U.S. equities soared to record highs on Thursday as fresh inflation data signaled easing price pressures, sparking renewed optimism for a Federal Reserve policy pivot. While risk appetite surged across stock markets, bond yields and gold prices held steady, reflecting lingering caution as investors weigh the durability of the disinflation trend.

Key Market Themes:

• Inflation Surprise Ignites Risk-On Rally: Cooling CPI figures fuel hopes for a Fed pause or cut, catalyzing a surge in growth stocks.
• Bonds Hold Steady Amid Cautious Optimism: Treasury yields show muted response as economists warn on data volatility.
• Crypto Faces Regulatory Headwinds: Digital assets retreat on security and compliance concerns, though XRP bucks the trend.
• Sector Rotation: Cannabis and Logistics in Focus: Regulatory reform hopes and robust earnings drive targeted sector moves.

1. Inflation Data Sparks Equity Rally

• The U.S. Consumer Price Index climbed just 0.1% in November, with core CPI up 0.2%, both under consensus forecasts. Year-over-year, headline inflation eased to 3.1%, down from 3.2% prior.
• This cooling inflation print reignited optimism for a soft landing, sending the S&P 500 to 6,774.76 and the Nasdaq to 23,006.36—both notching new highs for the year.
• Growth and technology names led the advance, reflecting investor confidence in a less hawkish Fed and increased risk appetite.
• Market-implied odds for a 2026 Fed rate cut rose sharply, but some caution remains as economists note potential transitory factors in the data.
• For investors, the move reaffirms the importance of monitoring upcoming macro releases and maintaining exposure to quality growth stocks amid policy uncertainty.

2. Bonds and the Fed — Cautious Optimism

• The 10-Year Treasury yield held at 4.1160% and the 30-Year at 4.7990%, indicating a subdued bond market response despite the risk-on equity rally.
• Economists cautioned that irregular market conditions might have skewed the CPI data, leading investors to refrain from aggressively pricing in a dovish pivot just yet.
• This stability in yields suggests a wait-and-see approach, with fixed income investors demanding firmer evidence of sustained disinflation before repositioning.
• For portfolio construction, duration risk remains a key consideration; holding a balance between intermediate and short-term maturities could help manage interest rate volatility.

3. Crypto Volatility: Regulatory Scrutiny and Security Risks

• Bitcoin and Ethereum both declined as the sector faced intensified regulatory scrutiny and heightened concerns over cybersecurity, highlighted by reports of record-breaking crypto thefts linked to North Korea.
• The broader digital asset market remains sensitive to regulatory headlines and enforcement actions, with institutional flows increasingly selective and risk-off.
• In contrast, XRP surged as investors responded to favorable legal developments, illustrating how asset-specific catalysts can decouple performance from the broader market.
• Ongoing regulatory uncertainty is likely to drive continued volatility and market dispersion, underscoring the need for careful asset selection and attention to compliance developments.

4. Sector Rotation: Cannabis and Logistics Stand Out

• The cannabis sector rallied on hopes of regulatory reform after former President Trump proposed easing federal marijuana restrictions, highlighting the impact of political catalysts on sector sentiment.
• FedEx's earnings beat and raised guidance underscored strength in logistics and e-commerce, positioning the sector as a beneficiary of resilient consumer and business demand.
• Apparel names like Nike faced headwinds despite positive earnings, as investors focused on competitive and supply chain pressures, signaling a selective approach to consumer discretionary exposure.
• Sustained sector leadership will likely hinge on further regulatory clarity for cannabis and continued operational execution in logistics and e-commerce.

Market Performance Snapshot

Earnings Highlights & Corporate Developments

• FedEx Corporation (FDX): $287.12 (+1.74%) – FedEx exceeded Q2 earnings expectations with a reported EPS of $1.74 and raised its full-year guidance. Strong performance was driven by increased demand for logistics services and effective cost management.
• Nike, Inc. (NKE): $65.63 (-0.09%) – Nike reported an adjusted EPS of $0.53, surpassing revenue expectations ($12.43B actual vs. $12.24B expected). However, the stock slipped slightly as investors weighed future growth sustainability against ongoing industry headwinds.

Looking Ahead: Key Catalysts

• Fed Policy: Investors await upcoming FOMC minutes and further inflation data for confirmation of a policy pivot.
• Macro Data: December labor market and consumer spending reports will shape expectations for economic momentum into 2026.
• Crypto Regulation: Ongoing developments in digital asset policy and enforcement actions will drive sector dispersion and volatility.
• Sector Watch: Cannabis stocks remain sensitive to legislative updates; logistics and e-commerce names could benefit from continued consumer demand.