U.S. stocks powered higher Thursday from large early-session drops as Wall Street shook off inflation data that showed consumer prices climbed more than expected.
The S&P 500 (^GSPC) was up nearly 3%, marking its biggest intraday comeback since February. The Dow Jones Industrial Average (^DJI) edged higher by more than 800 points, or 2.8%. The technology-heavy Nasdaq Composite (^IXIC) ticked up 2.2%. The 10-year Treasury yield moved closer to 4%.
In energy markets, Brent crude, the international benchmark for oil prices, rose 2.37% to $94.64 per barrel.
The Bureau of Labor Statistics released its Consumer Price Index (CPI) for September early Thursday, which showed prices rose 8.2% over the prior year and 0.4% over the prior month. The core consumer price index, which excludes food and energy, rose 6.6% from a year ago, marking the highest level since 1982. Core CPI rose by 0.6% month over month.
Economists surveyed by Bloomberg had expected a slight deceleration to 8.1% annually and the core reading to accelerate to 6.5% from a year earlier.
The reading marks another hotter-than-expected CPI print. Shelter, food, medical care indexes were the largest of "many contributors," the reported noted. The retreat of overall inflation — from 8.3% year-over-year in August — came as gasoline prices have eased.
Analysts said the report essentially clinched at least another 75-basis-point rate hike from the Federal Reserve when it meets in November.
"The stronger than expected 0.4% rise in consumer prices in September, driven yet again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and, in contrast to the Fed minutes released yesterday, suggests that the Fed may need to continue raising rates at that pace in December and perhaps beyond too," wrote Michael Pearce, senior economist at Capital Economics.
Thursday's session continued a murky week for investors marked by corporate earnings in addition to the inflation data. On Wednesday, the Producer Price Index (PPI), a measure of prices at the wholesale level, rose 0.4% in September after falling 0.2% during the prior month.
Also on Wednesday, investors mulled minutes from the Federal Reserve's latest monetary-policy meeting, in which several Fed officials suggested the risk of doing too little to control price increases outweighed the risk of doing too much.
Wall Street was watching for any hint at when and how much the central bankers will slow their rate increases. But officials’ forecasts from September indicated restrictive monetary policy would stay in place until inflation meaningfully comes down.
“Therefore, while the FOMC may have a dovish faction, for now they are far out of the majority and are still only tentatively making a case to slow the pace of hikes,” analysts at Bespoke Investments wrote in a note to clients.
On the corporate front, Delta Air Lines (DAL) kicked off earnings before the open. Delta posted a quarterly profit miss by Wall Street estimates on Thursday, while the carrier forecast travel demand to remain robust despite growing risks of an economic recession.
Shares of Netflix (NFLX) ticked up more than 5% following news that the streaming company would roll out a streaming plan with advertising for about $7 per month starting Nov. 3 in the U.S. as a way to boost subscribers.
Elsewhere on Wall Street, JPMorgan Chase CEO Jamie Dimon on Thursday said he had "total faith and trust" in Fed Chair Jerome Powell.
"They are doing the right thing now. A mild recession is far better than stagflation," he said of the Fed's campaign to rein in inflation.
At the annual Institute of International Finance event in Washington, D.C., Dimon also said he doesn't think there will be a "soft landing" and that his "gut" tells him the Fed funds rate will eventually need to be moved higher than 4%-4.5%.
Financial heavyweights such as the Dimon-led JPMorgan Chase (JPM) and Morgan Stanley (MS) are set to report earnings on Friday, while BlackRock (BLK) reported earnings on Thursday that included a 16% drop in profit.
"I still think household balance sheets are in decent shape," JPMorgan Asset Management Global Market Strategist Jordan Jackson told Yahoo Finance Live on Wednesday. "I will acknowledge that we do anticipate another quarter of a buildup in loan loss provisions across banks. This would be the sixth consecutive quarter that banks have decided to build up those loan loss reserves. And that is certainly going to act as a drag on overall bank earnings."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv