Inflation Cools, Micron Shines: Tech ETFs Catch Tailwind

Group 1: Market Overview - U.S. tech ETFs experienced a rally due to a cooler-than-expected inflation figure, which dampened Treasury yields [1][2] - The Consumer Price Index (CPI) for November was reported at 2.7% year-over-year, alleviating inflation concerns, while the core inflation rate softened to 2.6%, the lowest since March 2021 [2] - The 10-year Treasury yield moved closer to 4.11%, providing strong support for long-duration growth assets [2] Group 2: Semiconductor Sector Performance - The VanEck Semiconductor ETF (SMH) saw a 2.4% increase, benefiting from strong earnings reported by Micron Technology Inc [3][4] - The iShares Semiconductor ETF (SOXX) advanced by 3%, as easing inflation allowed the Federal Reserve to support growth without reigniting price pressures [4] - Micron's earnings beat reinforced optimism regarding memory pricing and AI-driven demand, lifting the broader chip complex [4] Group 3: Broader Tech Sector Gains - Nasdaq-linked ETFs, including the Invesco QQQ Trust ETF, showed gains due to lower yields, which lifted valuations in megacap tech companies [5] - The Vanguard Growth Index Fund ETF gained traction, reflecting renewed investor appetite for companies with longer-dated cash flows, as inflation effects dampened and bond yields receded [6] Group 4: Investor Sentiment and Risks - Despite the enthusiasm in semiconductor ETFs, there are concerns about valuations having little margin to withstand potential disappointments if inflation figures and earnings trends turn negative [7] - Some investors are pairing tech-intensive ETFs with equal-weight or low volatility strategies to hedge against downside risk [7] - Cooling inflation and reduced yields are currently seen as potent catalysts for tech ETFs, with semiconductors leading the charge [8]