Stocks staged a massive comeback Thursday, with the Dow Jones Industrial Average surging 1,500 points from its lows to the highest level, as traders shook off another hot inflation report.
The Dow Jones Industrial Average rose 827.87 points, or 2.83%, to close at 30,038.72 after being down more than 500 points earlier in the day. The S&P 500 climbed 2.60% to 3,669.91, breaking a six-day losing streak. The Nasdaq Composite gained 2.23% to end the day at 10,649.15.
The choppy session saw stocks fall to their lowest levels since 2020 following hotter-than-expected inflation data and then post a stunning rebound. The Dow regained more than 1,300 points as traders digested the September consumer price index report. The S&P 500 posted its widest trading range since March 2020.
Thursday marked the fifth largest intraday reversal from a low in the history of the S&P 500, and it was the fourth largest for the Nasdaq, according to SentimenTrader.
Gains in energy and bank stocks led the rebound. 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 such as Apple and Microsoft and a surge in semiconductors Nvidia and Qualcomm also contributed to the move higher.
Investors may be betting that the stronger-than-expected inflation report means price increases will peak soon.
"Maybe we get this last gasp higher in inflation and from here we start to decelerate," said Liz Ann Sonders, chief investment strategist at Charles Schwab. She added, however, that swings in stocks are likely to continue as investors digest more inflation data and earnings season kicks off.
"I think there's still plenty of things that could drive volatility and intraday swings are just the nature of the beast right now," she said.
Stocks fell to session lows when the September consumer inflation report showed a larger-than-expected increase. The consumer price index increased 0.4% for the month, more 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 interest rate hikes and keeps rates higher until price increases cool off.
Stocks closed higher Thursday after staging a major reversal in intraday trading.
The Dow Jones Industrial Average rose 827 points, or 2.83%, to close at 30,038.06 after being down more than 500 points earlier in the day.
The S&P 500 ticked up 2.60% to 3,669.87, breaking a six-day losing streak. The Nasdaq Composite gained 2.23% to end the day at 10,649.15.
—Carmen Reinicke
The SPDR S&P Regional Banking ETF is ahead 4.5%, led by KeyCorp, Regions Financial, Fifth Third and Huntington Bancshares (all of which higher by 6.3% or more), and on course to snap a six-day slide.
Financial stocks led the S&P 500 higher Thursday, with the S&P 500 Financials Index gaining 4.14%, six basis points more than the S&P 500 Energy index's 4.08%. (A basis point is 0.01 of a percentage point).
Still, the only stock in the S&P 500 setting a 52-week high Thursday was Cigna, which also reached an all-time high, dating back to its IPO in 1972.
— Scott Schnipper, Gina Francolla, Christopher Hayes
The market's huge rebound today is likely a reflection of sentiment, according to Jeff DeGraaf, chairman and head of technical research at Renaissance Macro Research.
"Sentiment has really been one of the primary bullish, or more persistent bullish attributes of the market," DeGraaf said on CNBC's "Closing Bell." He added that there was a low volume decline in the last two weeks with sentiment as bad as he's seen it in a long time.
"So really the stage was set," he said, adding that bulls as low as they were means concerns have been relatively discounted."
That set up the stage nicely for a rebound.
"I think people were positioned pretty bearishly going into this number," he said.
—Carmen Reinicke
Stocks surged to session highs in the last hour of trading Thursday, reversing after falling to lowest levels since 2020.
The Dow Jones Industrial Average rose 922 points, or 3%, recovering from a 500-point drop earlier in the day. The S&P 500 ticked up 2.75%, and the Nasdaq Composite gained 2.29%.
The S&P 500 is on track to snap a six-day losing streak.
—Carmen Reinicke
Every stock on the Dow Jones Industrial Average was in the green Thursday afternoon after the index rallied more than 1,300 points from session lows to session highs.
Walgreens Boots Alliance was the top performing stock, up more than 6%. JPMorgan and Goldman Sachs both ticked up, gaining roughly 5% and 4%, respectively, while American Express rose more than 3%. Dow Chemical, Chevron, McDonald's and 3M were all top gainers as well.
Process industries, energy materials and finance were the top performing sectors in the afternoon, according to FactSet.
—Carmen Reinicke
The S&P 500 on Thursday bounced off its 50% Fibonacci retracement level going back to the March 2020 lows. In other words, the benchmark dipped below the midway point between its pandemic low and the record high set in January and bounced off of it.
Source: FactSet
— Fred Imbert
Netflix shares traded more than 3% higher after the streaming giant said it will charge $6.99 for its its ad-supported subscriptions. The company also said commercials will run for 15 or 30 seconds.
— Alex Sherman
In this market environment, investors should be selective, Ritholtz Wealth Management CEO Josh Brown told CNBC Thursday.
"What is the rush? Why do you have to put on a whole position now? Why do you have to call a bottom now?" said Brown, referring to the chatter about whether or not Thursday's bounce meant a bottom was in.
"The right approach is adding exposure, just not acting that this is as bad as it can get, because clearly that has not been the case."
He particularly likes Dutch Bros, which was recently upgraded to outperform from neutral by JPMorgan. The stock is down about 30% from when it last reported earnings and will substantially grow its store locations, Brown said.
— Michelle Fox
Investors shouldn't trust the market rebound Thursday, and prepare for more volatility ahead, according to Greg Swenson, founding partner at Brigg Macadam, an investment bank.
"I think it's a mistake to get too excited about this rally," Swenson said. He said investor optimism that inflation has peaked — after the hotter-than-expected CPI report Thursday morning — will probably be short-lived.
"It's more of a bear market rally, and I think we're going to get more bad news," he said.
— Sarah Min
Heavily oversold conditions primed the market for Thursday's long overdue bounce but the vicious bear market cycle will likely continue, said Adam Sarhan, founder and CEO of 50 Park Investments.
After a big leg down, Sarhan said it's normal for the market to go lower, digest that move higher, make a new high, and drop again.
Thursday's stock market moves are likely a combination of short-covering and value investors stepping in, he said. That could also be influencing momentum traders to buy the jump.
Sarhan said earnings season could serve as another catalyst for a bounce going forward, especially if companies beat already low expectations.
— Samantha Subin
Some investors pricing in peak Federal Reserve tightening appears to be contributing to Thursday's market action, Oanda's Ed Moya said.
"Wall Street is confident that inflation is slowly coming down and that it will continue now that markets are pricing in the Fed to take rates into significantly restrictive territory," Moya said. "Peak Fed tightening is priced in for some and that is a good enough reason to buy stocks right now."
Still, Moya called the market reversal a "head-scratcher" given that the hot inflation print fueled expectations that the Fed's hiking cycle will likely persist.
— Samantha Subin
Thursday's huge market reversal in which early big losses dramatically switched to strong gains came as investors digested the morning's inflation report and didn't see a whole lot new in it, said Art Hogan, chief market strategist at B. Riley Financial.
"People settled back in and said, 'What's changed? What do we know that we didn't know?" said Art Hogan, chief market strategist at B. Riley Financial. "We knew the services piece of both [core and headline inflation] baskets was stubbornly higher. That's not new information – disappointing, but not new."
Hogan said the initial selloff was probably driven by the algorithms that steer computerized trading.
The reversal came after futures rallied on positive news out of the UK that the government would dial back some of its inflation-boosting tax-cut plans. Ironically, the S&P 500 was off by 2.39% at its session low and up by exactly that amount at its high, according to CNBC's Peter Schacknow.
"It really was a kneejerk move, especially when you juxtapose it with the pop we had before 8:30," Hogan said. "I don't think you're seeing a lot of individuals or professionals making adjustments on just one data point. The majority of moves we've seen as of late are the folks who trade on the age and do that minute by minute and not month by month."
—Jeff Cox
The S&P 500 was down as much as 2.39% at session lows during Thursday trading, and up as much as 2.39% at session highs. Those moves mark the widest trading range for the broader market index since March 2020.
In the history of the index, the S&P 500 has opened down more than 2% and closed up more than 2% only four times prior, according to Bespoke Investment Group.
Thursday would mark only the fifth time that's happened should the current moves hold through the close, the research firm said.
— Sarah Min, Peter Schacknow
While the consumer price index rose month over month in September, KKM Financial's Jeff Kilburg says inflation is easing.
"The strength of the CPI data was heavily weighed in lagging trend data and surging airline airfare," Kilburg said. "Inflation is trending lower albeit at a snail's pace."
On the back of the report, Kilburg says investors should stick with 2022 investing themes, finding value in energy and banks. He's also seeing growing opportunities in growth-focused areas like semiconductors.
"This is the slowest capitulation in the history of equities," Kilburg said. "Look at the VIX, it tells the story of the CPI data point today."
— Samantha Subin
Today's big intraday swing appears to be the product of traders closing out their short bets after a long period of declines for markets, said Larry Benedict of The Opportunistic Trader.
"People tried to press the short down on the low of the year, and then there was a big short-covering rally. And what I'm seeing here is just a lack of a liquidity. There's no sellers left. The market has now sellers now, for the minute," Benedict said.
The bond market, however, has seen a much softer turnaround, and that could signal that this stock rally will be short-lived.
"The rally may hold for today, but unless you get the bond market getting stability I don't see us going anywhere long-rage here, as far as a definite bottom," Benedict said.
— Jesse Pound
Oil was moving in step with the stock market, rising midday despite posting drops following consumer inflation data coming in hotter than expected in the morning.
Brent crude futures were up $1.65, or 1.8%, to $94.10 a barrel. That increase comes after sliding to a low of $91.19, which is a difference of about 3% from its current price, around 9 a.m. after the inflation data was released.
U.S. West Texas Intermediate crude was up 1.7%, which translates to $1.50, at $88.75 a barrel. It was previously down to a low of about $86.10 just before 10:30 a.m., which about 3% lower than its current trading level.
Precious metals also seesawed as investors digested the data.
— Alex Harring
Tech stocks rebounded after slumping earlier in the session on the back of another hot inflation report and dragging the tech-heavy Nasdaq Composite down more than 3% at one point.
Shares of semiconductor stocks Nvidia, Qualcomm, and Micron Technology surged 2.2%, 3.5% and 3.9%, respectively, while Applied Materials jumped 4.5% despite its earlier revenue warning.
Big technology names Apple and Microsoft gained at least 1% each, while Salesforce and Meta Platforms held on to slight gains.
The move higher in tech contributed to the market's broad comeback rally.
— Samantha Subin
US Treasury yields have backed off their highs, likely helping the late-morning turnaround for stocks.
The 10-year Treasury yield had eased back to 3.968% after rising as high as 4.08% earlier in the session. Still, the yield was up about six basis points for the day. A basis point is equal to 0.01 percentage points.
Short-term yields have also pulled back from their highs, but they still show dramatic moves for the day. The 2-year Treasury yield was up about 16 basis points 4.447%. It had been up more than 20 basis points earlier.
—Jesse Pound
The oversold stock market staged a massive comeback as investors bet that peak inflation is behind us, while strong corporate earnings also offered traders some solace, according to Adam Crisafulli, founder of Vital Knowledge.
"Stocks were crushed out of the gate, but they've since rebounded strongly thanks to seller exhaustion, a sense that actual inflation is already past its peak, and strong earnings," Crisafulli said in a note.
— Yun Li
Bank stocks rallied to help the broader market recover from the day's lows and stage a massive comeback.
Goldman Sachs, Wells Fargo and Morgan Stanley were all up more than 2%. Citigroup gained 4%, and JPMorgan Chase climbed 3.2%.
The SPDR S&P Bank ETF (KBE) gained 2%, on pace to snap a six-day losing streak.
— Fred Imbert