Dow closes 800 points higher after a historic one-day turnaround

Three experts react to September's hotter-than-expected inflation report

Stocks staged a massive comeback Thursday, with the Dow Jones Industrial Average surging 1,500 points from peak to trough, 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.

Loading chart…

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.