Deflating Inflation. Investors can cross one item off their holiday wish list: a lukewarm CPI. The consumer price index, released this morning, showed a 2.7% year-over-year rise in November. That was a pleasant surprise to economists, who had expected 3.1%. The core figure, which strips out volatile food and energy, rose 2.6%, also a good bit below estimates.

Stocks rallied on the news, since the report could give the Federal Reserve breathing room to fight a potentially slowing economy with additional rate cuts. The odds for a January rate cut are now better than one in four, according to the CME FedWatch tool.

The tech-heavy—and rate sensitive—Nasdaq Composite was a standout, rising 1.4% on the day. The S&P 500 was up 0.8%, while the Dow Jones Industrial Average was up 66 points, or 0.1%.

Much of the inflation surprise stemmed from softer price gains in shelter. That’s good news for consumers faced with stubbornly high housing prices, but that decline masked continued issues elsewhere. “The underlying trend in services decelerated less meaningfully, as services wage growth remains elevated,” Michael Reid, senior U.S. economist for RBC wrote today.

The remnants of the government shutdown continue to affect data, Reid notes, making the November report somewhat noisy. “While this morning’s print was an early holiday gift for Fed Doves—we caution against putting too much weight in the report given the data collection challenges that impacted both October and November.”

The Hot Stock: Micron Technology +10.2%
The Biggest Loser: FactSet Research Systems -7.7%

Best Sector: Consumer Discretionary +1.8%
Worst Sector: Energy -1.4%

The corporate surprise this morning came from an unusual $6 billion merger between Trump Media & Technology Group and TAE Technologies, a company seeking to commercialize nuclear fusion. The mash-up of fusion and President Donald Trump’s preferred social-media platform wasn’t on most investors’ bingo cards. Trump Media stock finished the day up 42%.

The deal provides TAE with a total of $300 million to pursue its fusion ambitions. During a call with investors, TAE CEO Michl Binderbauer said “Capital is now becoming our biggest challenge.”

“This will allow us to accelerate our near-term objectives,” he added. “And upon closing, their fortress balance sheet will propel us towards first power in 2031.”

My colleague Avi Salzman talked to Binderbauer, who said that Trump Media’s political connections weren’t the driving force behind the deal. He told Avi:

Binderbauer and Trump Media CEO Devin Nunes will serve as co-CEOs of the combined company.

Carnival, Conagra Brands, Lamb Weston Holdings, and Paychex report earnings tomorrow.

The Bank of Japan announces its monetary policy decision. The BOJ is widely expected to hike its benchmark interest rate by a quarter of a percentage point, from 0.5% to 0.75%. That would be the highest level since 1995.

The National Association of Realtors reports existing-home sales for November. Economists forecast a seasonally adjusted annual rate of 4.15 million homes sold, slightly more than in October. The median sales price of an existing home was $415,200 in October, according to the NAR.

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