Why CPI data is such a big stock-market mover this year

Another consumer-price index, another big market move.

U.S. stocks mounted a remarkable turnaround on Thursday with the Dow Jones Industrial Average surging nearly 1,500 points from peak to trough, after a sharp selloff early in session sparked by hotter-than-expected U.S. inflation data.

The consumer-price index increased 0.4% in September, higher than the 0.3% consensus forecast polled by Dow Jones, according to the Bureau of Labor Statistics. Excluding volatile food and energy prices, the core CPI is even more worrisome, jumping a sharp 0.6% against the estimate of a 0.4% increase.

Theyre just not good news, said Chris Campbell, chief policy strategist at Kroll. What they (Federal Reserve) have done has not yet worked, so they brought out the big guns by raising interest rates, and more of the smaller guns by instituting quantitative tightening, but even those two together have not borne fruit.

The hotter-than-expected inflation report sent three stock indexes tumbling early in the session with the S&P 500 SPX, +2.60% plunging 2.4% to its lowest level since November 2020, but the large-cap index finished 2.6% higher led by gains in energy and financials stocks, a swing of over 5% in total.It was also the first time on recordthat the Dow has risen at least 800 points in the same trading day that it was down at least 500 points at its low, according to Dow Jones Market Data.