Stocks staged an enormous comeback Thursday, with the Dow Jones Industrial Average surging 1,500 points from peak to trough before ending just under highs of the times, as traders shook off one other hot inflation report.
The Dow Jones Industrial Average rose 827 points, or 2.83%, to shut at 30,038.06 after being down greater than 500 points earlier within the day. The S&P 500 ticked up 2.60% to three,669.87, breaking a six-day losing streak. The Nasdaq Composite gained 2.23% to finish the day at 10,649.15.
The choppy session saw stocks fall to their lowest levels since 2020 following hotter-than-expected inflation data after which post a shocking rebound. The Dow regained greater than 1,400 points as traders digested the September consumer price index report. The S&P 500 posted its widest trading range since March 2020.
Gains in energy and bank stocks led the reversal. Shares of Chevron gained 4.85% as oil prices spiked, and bank stocks Goldman Sachs and JPMorgan rose 3.98% and 5.56%, respectively. A reversal in big tech names corresponding to Apple and Microsoft and a surge in semiconductors Nvidia and Qualcomm also contributed to the move higher.
Investors could also be betting that the stronger-than-expected inflation report means price increases will peak soon.
“Perhaps we get this last gasp higher in inflation and from here we begin to decelerate,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. She added, nevertheless, that swings in stocks are more likely to proceed as investors digest more inflation data and earnings season kicks off.
“I believe there’s still loads of things that might drive volatility and intraday swings are only the character of the beast straight away,” she said.
Stocks fell to session lows when the September consumer inflation report showed a larger-than-expected increase. The buyer price index increased 0.4% for the month, greater than the 0.3% estimate from Dow Jones. On an annual basis, inflation was up 8.2%.
Persistent high inflation could mean that the Federal Reserve is more aggressive with future rate of interest hikes and keeps rates higher until price increases cool off.
