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Dow pops 1,200 points, S&P 500 jumps 5% in biggest rally in two years after light inflation report

Sarah Min
Alex Harring
Pro Picks: Watch all of Thursday's big stock calls on CNBC
VIDEO4:5104:51
Pro Picks: Watch all of Thursday's big stock calls on CNBC
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Stocks mounted their biggest rally since 2020 after October's reading of consumer prices raised investor hopes that inflation has peaked.

The Dow Jones Industrial Average jumped 1,201.43 points, or 3.7%, to 33,715.37 for its biggest one-day gain since stocks were emerging from the depths of the pandemic bear market. The S&P 500 jumped 5.54% to 3,956.37 in its biggest rally since April 2020. The Nasdaq Composite surged 7.35%, its best since March 2020, closing at 11,114.15.

October's consumer price index rose just 0.4% for the month and 7.7% from a year ago, its lowest annual increase since January and a slowdown from the 8.2% annual pace in the prior month. Economists were expecting increases of 0.6% and 7.9%, according to Dow Jones. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also less than expected.

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Treasury yields plunged after the CPI report, with the 10-year Treasury yield falling roughly 30 basis points to 3.81% as traders bet the Federal Reserve would slow its aggressive tightening campaign that's weighed on markets all year. The yield on the 2-year Treasury dropped about 30 basis points to 4.32% (1 basis point equals 0.01%). The U.S. dollar, another recent pressure point for stocks, tumbled to its worst day since 2009 versus a basket of other currencies.

"Interest rates are still running everything in markets," said Exencial Wealth's Tim Courtney. "With today's CPI number coming down, the market is now betting pretty clearly that they think the interest rate [rises] are coming close to an end. So, you see those interest rate sensitive stocks doing really, really well."

Tech stocks that have been hardest hit by the rise in inflation and surging interest rates led the gains Thursday. Shares of Amazon were up about 12.2%. Apple and Microsoft each advanced more than 8%. Shares of Meta rallied more than 10%. Tesla jumped 7%.

Semiconductor stocks got a boost too, with shares of Lam Research gaining 12% and Applied Materials rising more than 11%. KLA popped 9%.

Thursday's advance rekindled the comeback rally that began in mid-October but stalled in recent weeks. The Dow touched its highest since August on Thursday and the S&P 500 rose above the 3,900 threshold, which has been a key resistance level for the market.

Lea la cobertura del mercado de hoy en español aquí.

Stocks mount their biggest one-day rally since 2020

Stocks mounted their biggest rally since 2020 after a weaker than expected inflation report buoyed investor hopes that inflation has peaked.

The Dow Jones Industrial Average jumped more than 1200 points, or 3.7%, in its best day since May 2020. The S&P 500 jumped 5.54%, in its biggest one-day rally since April 2020. The Nasdaq Composite surged 7.35%, its best since March 2020.

— Sarah Min

Average 30-year mortgage rate tumbled 60 basis points to 6.62%

Another data point for the equity market to like: The average rate on a 30-year fixed-rate mortgage plunged 60 basis points to 6.62% from 7.22% yesterday, Mortgage News Daily said. (A basis point is 0.01%, or one one-hundredth of a percent.)

That matches the record drop at the start of the Covid 19 pandemic, although the rate is still more than double what it was at the start of 2022.

"This is the best argument to date that rates are done rising, but confirmation requires next month's CPI to tell the same story," said Matthew Graham, chief operating officer of Mortgage News Daily. But Graham said rates are not out of the woods. They are unlikely to move dramatically lower, as there is still plenty of economic uncertainty in the U.S. and overseas.

— Scott Schnipper, Diana Olick

Commodities rally with stock market

Commodities rallied along with the stock market Thursday.

Brent crude rose gained 0.9%. The U.S. West Texas Intermediate's crude followed at 0.6% up.

Metals were up multiple percentage points.

The big winners were palladium and platinum, up 5.7% and 5.6%, respectively.

Spot gold added 2.8%, while U.S. gold futures gained 2.5%.

Silver was up 3.1%.

— Alex Harring

Stocks at session highs into final hour of trading

Stocks were at session highs heading into the final hour of trading Thursday.

The Dow Jones Industrial Average surged 1,093 points, or 3.4%, in its biggest one-day rally since 2020. The S&P 500 jumped 4.9%. The Nasdaq Composite surged 6.4%.

Every sector in the S&P 500 was higher, with information technology, real estate and consumer discretionary outperforming. They were up 7.1%, 6.7% and 6.7%, respectively.

Some of the stocks hardest hit this year by surging inflation and rising interest rates rallied on Thursday. Shares of Carvana were up 29%, even with the stock down more than 95% this year. Shares of Yeti was 30% higher. Wayfair advanced 27%.

Treasury yields plunged, with the 10-year yield down nearly 31 basis points to 3.833%.

— Sarah Min

Wolfe Research downgrades GM

General Motors got a downgrade from Wolfe Research, citing headwinds to OEM profitability.

"Until now, GM has been a massive beneficiary of the industry's tight supply/demand," analyst Rod Lache said in a note. "But a significant negative turn now seems inevitable: Used vehicle trade-in values are down 15% YTD and are likely to decline further; Auto Loan rates are up about 150 bps YTD (to around ~6%) and are likely to rise by another 200 bps in the near term, and inventory has slowly started to build as production has improved faster than sales."

— Fred Imbert, Michael Bloom

Wolfe Research says stock rally may continue, but don't expect the Fed to pivot

Stocks may continue to rise after October's CPI report came in weaker than expected, but don't expect the Federal Reserve to reverse course anytime soon, according to Wolfe Research.

"We wouldn't be surprised to see some near-term follow through on this morning's very strong rally, including the S&P 500 trading up toward its 200-day moving average into the 4050-4100 range," Chris Senyek wrote in a Thursday note.

"However, this morning's report does not make us change our views that the FOMC will ultimately hike the fed funds rate to between 5%-6% and that a demand-driven recession will hit next year," he added.

— Sarah Min

Dan Niles says he's "playing this rally" until the next CPI print

Satori Fund's Dan Niles said he's bullish on markets at least until the next consumer inflation reading in December.

"We're still playing this for a rally at least until sort of that December 13th next CPI print. And this could be a huge one, because you got to remember the biggest bear market rallies happen toward the end of bear markets," Niles said Thursday on CNBC's "TechCheck."

The major averages rallied after a cooler than expected October CPI print raised investor hopes that inflation is cooling. The Dow Jones Industrial Average was up more than 1000 points at one point in the day. Niles said he's "having one of the best days of the year," and expects the rally will continue.

"We're pretty bullish between now and at least December 13th," he said.

— Sarah Min

Stocks making the biggest moves midday

Check out the stocks making the biggest moves in midday trading:

  • Fair Isaac – The analytics company soared 27% after it posted better-than-expected earnings for its fiscal fourth quarter.
  • Rivian – Shares jumped 18% after the electric vehicle maker reported a smaller-than-expected quarterly loss. It also said p