Stocks saw a massive rally on Thursday, with the Dow Jones Industrial Average surging 1,500 points from peak to trough as traders shrugged off another hot inflation report.
The Dow Jones Industrial Average rose 827.87 points (2.83%) to close at 30,038.72 after falling more than 500 points the day before. The S&P 500 climbed his 2.60% to 3,669.91, breaking a six-day losing streak. The Nasdaq Composite finished the day his 2.23% higher at 10,649.15.
In a choppy session, higher-than-expected inflation data saw equities fall to their lowest level since 2020 before posting a spectacular rebound. The Dow regained more than 1,300 points as traders digested September’s consumer price index report. The S&P 500 hits record widest trading range since March 2020.
Thursday marked the fifth largest intraday reversal from an all-time low for the S&P 500 and the fourth largest on the Nasdaq, according to SentimenTrader.
A rally in energy and banking stocks led the rebound. Chevron shares rose 4.85% on the surge in oil prices, while bank stocks Goldman Sachs and JP Morgan rose 3.98% and 5.56%, respectively. The reversal of tech giants such as Apple and Microsoft and the surge of semiconductors his Nvidia and Qualcomm also contributed to the rise.
Investors may be expecting inflation to peak soon as inflation reports were stronger than expected.
“Inflation may pick up and start slowing from here,” said Liz Ann Saunders, chief investment strategist at Charles Schwab. But volatility in stocks is likely to continue as investors digest more inflation data and earnings season begins, she added.
“I think there are still a lot of things that could push volatility up, and intraday fluctuations are just the nature of the beast right now,” she said.
Stocks fell to session lows when September’s consumer inflation report posted a better-than-expected rise. The consumer price index rose 0.4% for the month, beating the Dow Jones estimate of 0.3%. On an annual basis, inflation he rose 8.2%.
Sustained high inflation could mean the Federal Reserve becomes more aggressive about future rate hikes, holding off until inflation stabilizes.