Dow, S&P 500 Rally as Inflation Eases; Gold Hits All-Time High

• Inflation drop: November’s Consumer Price Index showed core inflation at a four-year low, according to the Bureau of Labor Statistics.
• Fed outlook: If the trend continues, the Federal Reserve could cut interest rates without reigniting inflationary pressures.
• Complication: A government shutdown has clouded the reliability of the data, adding uncertainty to the outlook.
• Job market focus: Rate cuts would aim to support the faltering labor market while balancing inflation risks.

The path to 8000 for the S&P 500 may require more than the two interest-rate cuts JPMorgan projects.

JPMorgan analysts expect the benchmark index to close 2026 at 7500, signaling a 10% climb from current levels. Their Thursday research outlines two quarter-point cuts from the Federal Reserve next year, but they note that additional easing could fuel an 18% rally, echoing this year’s strong performance.

CME FedWatch data shows the highest probability of two cuts by December 2026. Meanwhile, prediction markets lean slightly more aggressive, with Polymarket bettors anticipating three cuts equivalent to a three-quarter percentage point reduction in rates over the year.

• Data distortion risk: Experts caution that the recent inflation decline may be misleading, as the October–November government shutdown disrupted Bureau of Labor Statistics surveys. October price data wasn’t reported at all.
• Housing impact: Economists have long anticipated cooling inflation due to slowing home prices after pandemic-era surges. The latest figures suggest that trend may finally be materializing.
• Fed crossroads: The sharp drop could influence Federal Reserve officials as they weigh whether to keep rates higher for longer to combat inflation, or cut them to stimulate hiring and prevent rising unemployment.
• Market view: “A surprisingly sharp decline in U.S. consumer price inflation should grease the wheels for further Fed easing in 2026,” noted Sal Guatieri, senior economist at BMO Capital Markets.

Artificial intelligence-linked stocks have pushed S&P 500 valuations higher, but investors are warning of weaker annual returns ahead. Historically, the benchmark index has averaged about 10% annually since the late 1950s. JPMorgan’s base-case outlook suggests another year of double-digit gains is possible, though exceeding that will likely require additional support from the Federal Reserve.

While some market watchers expect a new Fed chairman to bow to political pressure and lower rates below the 3% 3.25% range, JPMorgan analysts clarified that their more bullish forecast hinges instead on further cuts driven by “improving inflation dynamics.”

Lululemon is in search of a new chief executive, and one of its largest investors has already stepped forward with a suggestion.

Just days after the retailer announced its CEO hunt, activist investor Elliott Investment Management floated Jane Nielsen as a potential candidate. Nielsen, who played key roles in reviving Ralph Lauren (RL) and Coach, now part of Tapestry (TPR), has drawn a positive response from the market, signaling investor confidence in her leadership credentials.

Elliott’s proposal, first reported by The Wall Street Journal, comes as the firm has built a stake exceeding $1 billion in Lululemon. That investment gives Elliott significant influence in a company valued at roughly $25 billion, positioning it to shape the retailer’s turnaround strategy.

Lululemon Athletica (LULU) did not provide a comment before publication, but investors appear receptive to Elliott Investment Management’s involvement and its candidate, Jane Nielsen. Nielsen, formerly CFO at Ralph Lauren and currently a board member at Mondelēz International (MDLZ), has been met with optimism shares of Lululemon recently rose more than 4%. Despite this rally, the stock remains down over 40% this year, underscoring the urgency for new leadership.

“Lululemon is one of the strongest brands in retail, built on exceptional products, engaged communities, and global potential,” Nielsen told The Journal. “I would welcome the opportunity to discuss this role with the Lululemon board.”

FactSet Research Systems (FDS) led S&P 500 decliners Thursday after reporting fiscal 2026 first-quarter cash flow figures that fell well short of Wall Street expectations.

Shares dropped more than 8% after the Norwalk, Conn.-based financial data provider posted operating cash flow of $121.3 million and free cash flow of $90.4 million. Analysts surveyed by Visible Alpha had projected $179.9 million and $154.8 million, respectively.

Despite the miss on cash flow, FactSet’s adjusted earnings of $4.51 per share and revenue of $607.6 million came in above consensus forecasts.

Even with today’s steep decline, FactSet stock remains down more than 40% year-to-date, underscoring investor concerns over growth momentum.

Protein demand has surged across the food industry this year, and Chipotle Mexican Grill (CMG) is stepping into 2026 with a new offering designed to meet that appetite.

The burrito chain, long known for customers using ordering “hacks” to squeeze in more meat such as mixing half chicken and half beef announced Thursday that it will debut an official high-protein menu.

The rollout includes what Chipotle is calling its “first-ever” snack: a 4-ounce chicken or steak bowl priced under $4. It also features regular bowls and burritos with double meat, alongside new protein-heavy salads and bowls. The company said the menu will launch Tuesday.

A recent survey shows that high protein was the top diet choice among Americans this year, fueling demand across the food and beverage industry. Protein is widely associated with satiety, muscle building, and overall wellness, making it a key focus for companies looking to capture health-conscious consumers.

Starbucks (SBUX) earlier introduced protein-infused foam, while other brands have rolled out protein-packed fruit punches, plant-based coffees, and waffles. Even Khloé Kardashian added protein to her popcorn line. Chipotle’s new menu highlights these consumer motivations, offering celebrity-inspired meals designed for athletes, dieters, and those pursuing general wellness goals.

Instacart’s reliance on artificial intelligence to set prices is now under scrutiny from federal regulators.

The Federal Trade Commission has opened an inquiry into the grocery delivery platform’s AI pricing tools after findings suggested customers were being charged significantly different amounts for identical items, according to a Reuters report Wednesday.

Consumer Reports, Groundwork Collaborative, and More Perfect Union recently published research showing that prices for roughly three-quarters of surveyed items on Instacart varied by as much as 23% among users shopping simultaneously. The study estimated these discrepancies could cost a typical household up to $1,200 annually. A separate review of transactions by an Investopedia editor found similar price swings for Costco (COST) products ordered through Instacart.

Instacart pushed back against criticism of its pricing practices, saying reports have mischaracterized how its system works. A company spokesperson told Investopedia that retail partners set their own strategies, and Instacart works to align online and in-store prices where possible. The spokesperson emphasized that the platform does not use dynamic or surveillance pricing, nor does it rely on personal or demographic data. Instead, the company described its approach as randomized A/B testing, similar to methods retailers have long used across different store locations.

The Federal Trade Commission, while maintaining its policy of not commenting on ongoing investigations, acknowledged public concern. In a statement Thursday, the agency said it was “disturbed” by recent reports about Instacart’s alleged pricing practices, echoing worries shared by many consumers.

Investors cheered Eli Lilly’s latest late-stage trial data, sending shares higher by more than 2% Thursday morning.

The pharmaceutical giant reported that patients taking its new oral obesity treatment, orforglipron, maintained most of the weight loss achieved with injectable drugs such as Lilly’s own Zepbound and Novo Nordisk’s (NVO) Wegovy. The Phase 3 study showed orforglipron met its primary and all secondary endpoints for weight maintenance versus placebo at 52 weeks.

Lilly confirmed it has submitted orforglipron to the U.S. Food and Drug Administration for approval. The drug was recently granted a Commissioner’s National Priority Voucher, potentially expediting the review process.

Kenneth Custer, Ph.D., executive vice president and president of Lilly Cardiometabolic Health, said the pill “helped people maintain the weight they worked hard to lose,” noting participants successfully transitioned from high-dose injectables to oral therapy. If approved, orforglipron could offer a more convenient option for millions living with obesity worldwide.

Shares of Eli Lilly have gained about 28% this year, while Novo Nordisk’s U.S.-listed stock was little changed Thursday but remains down roughly 45% in 2025.

Lululemon Athletica (LULU) shares lifted the S&P 500 Consumer Discretionary sector Thursday morning, driving it to the top spot among the index’s 11 tracked industries.

The athleisure retailer’s stock jumped 6.5% about an hour into trading after The Wall Street Journal reported that activist investor Elliott Investment Management had taken a $1 billion stake and is backing Jane Nielsen, a former Ralph Lauren executive, as the company’s next CEO.

The Consumer Discretionary sector rose 2% overall, outperforming all other industries in the benchmark index. Williams-Sonoma (WSM), Starbucks (SBUX), and DoorDash (DASH) also contributed to the rally, each climbing more than 4%.

Birkenstock Holding (BIRK) shares dropped 4% at Thursday’s open after the German footwear brand issued fiscal 2026 guidance that fell short of analyst expectations.

The company projected adjusted earnings of €1.90 €2.05 per share on revenue of €2.30 €2.35 billion, compared with Visible Alpha forecasts of €2.07 and €2.37 billion.

Despite the softer outlook, Birkenstock’s fiscal 2025 fourth-quarter profit and revenue topped consensus estimates.

CEO Oliver Reichert emphasized that demand remains strong worldwide, noting growth is constrained only by production capacity and the brand’s strategy of maintaining scarcity.

Shares of Birkenstock are down about 20% year-to-date, reflecting investor caution despite resilient consumer appetite.

Inflation dropped to its lowest level in years last month, defying forecasts and signaling potential relief for consumers.

The Bureau of Labor Statistics reported Thursday that consumer prices rose 2.7% over the 12 months through November, down from September’s 3% annual increase and below the 3.1% gain economists surveyed by Dow Jones Newswires and The Wall Street Journal had expected. Core inflation, which strips out food and energy, climbed 2.6% year-over-year, its weakest pace since 2021 and down from 3% in September.

Economists highlighted the decline in core inflation as particularly significant, since it is viewed as a more reliable gauge of long-term price trends. Volatile categories like food and gas often distort headline figures, making the core measure a key focus for policymakers and markets.

Inflation eased in November, driven by falling prices for hotel stays, recreation, and clothing. Shelter costs, a major component of the Consumer Price Index, rose just 0.2% between September and November, contributing to the overall slowdown.

The release of Thursday’s report was delayed by more than a week due to the October November government shutdown, which also prevented the Bureau of Labor Statistics from publishing October’s inflation data.

Trump Media & Technology Group (DJT), parent of Truth Social, surged 25% in premarket trading Thursday after announcing a $6 billion all-stock merger with fusion power firm TAE Technologies.

The deal, expected to close in mid-2026, will give shareholders of each company roughly equal ownership in the combined entity. The rally comes after DJT shares had fallen nearly 70% this year, with the merger news helping the stock recover a significant portion of its losses before the opening bell.

The merged Trump Media & Technology Group (DJT) and TAE Technologies announced plans to begin construction of the first utility-scale fusion power plant in 2026. Executives said the project aims to deliver abundant, reliable electricity that could strengthen America’s position in the global economy and accelerate its role in the artificial intelligence revolution.

Trump Media CEO Devin Nunes and TAE CEO Dr. Michl Binderbauer will serve as co-CEOs of the combined company. Nunes described fusion power as “the most dramatic energy breakthrough since the onset of commercial nuclear energy in the 1950s,” highlighting its potential to lower energy costs, expand supply, revive U.S. manufacturing, and bolster national defense. He emphasized that Trump Media’s capital and market access will help bring TAE’s technology to commercial scale.

Trump Media & Technology Group shares, which debuted near $80 in March 2024, closed Wednesday at $10.47, reflecting steep declines despite Thursday’s merger-driven rally.

Darden Restaurants (DRI) shares rose 4% in premarket trading Thursday after the company reported stronger-than-expected fiscal 2026 second-quarter results and raised its full-year outlook.

CEO Rick Cardenas credited the performance to “being brilliant with the basics,” as flagship brands Olive Garden and LongHorn Steakhouse delivered solid same-restaurant sales growth.

The Orlando-based restaurant group posted consolidated sales of $3.10 billion and same-restaurant sales of 4.3%, topping analyst expectations of $3.07 billion and 2.87%, respectively, according to Visible Alpha. Adjusted earnings came in at $2.08 per share, narrowly missing consensus by one cent.

Darden Restaurants (DRI) reported robust same-restaurant sales growth across its portfolio, with LongHorn Steakhouse up 5.9%, Olive Garden rising 4.7%, and its Fine Dining segment including Ruth’s Chris Steak House gaining 0.8%. Each result exceeded analyst expectations.

The company raised its fiscal 2026 guidance, projecting overall sales growth of 8.5% 9.3%, up from 7.5% 8.5%, and same-restaurant sales growth of 3.5% 4.3%, compared with its prior forecast of 2.5% 3.5%.

CEO Rick Cardenas said the second quarter surpassed top-line expectations as all segments delivered positive results. He credited restaurant teams for “being brilliant with the basics,” noting record guest satisfaction scores across brands. Despite commodity cost pressures, Darden leveraged its competitive strengths to deliver value and invest in long-term success.

Shares of Darden Restaurants entered Thursday up less than 2% year-to-date, reflecting cautious investor sentiment despite the improved outlook.

Stock futures ticked up Thursday morning as investors awaited fresh inflation data.

Contracts tied to the Dow Jones Industrial Average rose 0.2%, signaling cautious optimism ahead of the Bureau of Labor Statistics’ release. Traders are watching closely for signs of cooling price pressures, which could influence Federal Reserve policy and broader market sentiment.