The Dow Jones industrial average rose 822 points, or 2.8%, recovering from a 500-point drop earlier in the day. The S&P 500 rose 2.42% and the Nasdaq Composite gained 2.07%. The volatile session saw stocks fall to their lowest levels since 2020 after higher-than-expected inflation data and then stage a stunning recovery. The Dow recovered more than 1,300 points as traders digested the September consumer price index report. The S&P 500 posted its biggest trading range since March 2020, from a 2.39% decline to a 2.39% gain. Gains in energy and banking stocks led the reversal. Chevron shares gained nearly 5% as oil prices jumped, and banking stocks Goldman Sachs and JPMorgan rose 4.21% and 5.76%, respectively. Upheaval in big tech names like Apple and Microsoft and the rise of Nvidia and Qualcomm semiconductors also contributed to the rise. Investors may be betting that the stronger-than-expected inflation report means price increases will peak soon. “Maybe we have that last gasp higher in inflation and from here we start to slow down,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. He added, however, that volatility in stocks is likely to continue as investors digest more data on inflation and earnings season begins. “I think there’s still a lot of things that could lead to volatility, and intraday swings are just the nature of the beast right now,” he said. Stocks fell to session lows after the September consumer inflation report showed a bigger-than-expected rise. The consumer price index rose 0.4% for the month, more than the Dow Jones estimate of 0.3%. On an annual basis, inflation increased by 8.2%. Persistently high inflation could mean the Federal Reserve is more aggressive with future rate hikes and keeps rates higher until price increases calm down. Thursday’s CPI report comes a day after the government said the producer price index, another measure of inflation, rose more than expected. Going forward, investors will be watching for the start of earnings season. On Friday, major banks JPMorgan Chase, Wells Fargo, Morgan Stanley and Citigroup all report results.
