The stock market sold off at Thursday's open after September core prices jumped to a 40-year high. But indexes made an impressive reversal and were higher at midday, along with many major stocks.
The Nasdaq composite plummeted more than 3% at the open but was up 1.2% before the noon hour on Wall Street. The S&P 500 rallied 1.5%. The Dow Jones Industrial Average, which undercut its Sept. 30 low early today, bounced back 1.7%.
Volume jumped on the NYSE and Nasdaq compared with the same time on Wednesday. Breadth also turned around. Advancers topped decliners by 12-5 on the NYSE and by nearly 4-to-1 on the Nasdaq.
Emblematic of today's reversal, Apple reversed higher and made a 2% increase at midday. It remains in a downtrend though.
The Innovator IBD 50 ETF went from a 2% drop to a 2.3% increase. Energy stocks such as CVR Energy, Talos Energy and PDC Energy led with gains of 5% or more.
Inflation Sends Stock Market Reeling
The consumer price index eased slightly to 8.2% in September, from 8.3% the previous month. But prices rose 0.4% for the month, accelerating from the 0.1% increase in August, the Bureau of Labor Statistics said.
Core inflation, which excludes food and energy items, climbed 0.6%, not slowing at all from an identical August increase. Core prices jumped 6.6% year over year, the largest increase since August 1982.
"The acceleration in services inflation, on the back of continued strength in shelter inflation and wage pressures from a very tight labor market, will likely keep inflation uncomfortably high for some time," Olu Sonola, head of U.S. regional economics at Fitch, said in a note. "The only iota of good news is that core goods inflation continued to moderate. The bottom line is the Fed's aggressive march towards restrictive interest rate territory continues full speed."
In another economic report, jobless claims rose by 9,000 to 228,000. Economists had forecast 225,000 new claims, according to Econoday.
The yield on the benchmark 10-year Treasury note jumped 16 basis points to 4.07%, before easing to 3.95%. The CPI print all but guarantees a 75-basis-point interest rate hike at the next Fed meeting.
Thursday's plunge sent the stock market indexes to new lows for the bear market. On Wednesday, the S&P 500 made its lowest close since November 2020 and the Nasdaq hit its lowest close since July 2020.
Earnings Reports Provide Stock Market Bright Spots
Several major stocks rose after earnings reports.
Delta Air Lines jumped 5% after its third-quarter report. The airline missed earnings expectations while revenue was slightly under views. However, bullish Q4 earnings guidance attracted buying interest.
Domino's Pizza rallied 10% after bouncing off the 300 price level. The company beat earnings expectations as third-quarter sales rose 7%. Higher U.S. sales offset a decline from international operations hurt by a stronger dollar. Domino's is on pace for its best day since July 22, 2021, when it rose 14.6%, according to Dow Jones Market Data.
Walgreens Boots Alliance climbed nearly 6% in big volume as it works on a rebound. It's having its best day since almost a year ago. On Oct. 14, 2021, it rose 7.4%. The drugstore and health care provider posted a 5% drop in sales for the August quarter as Covid vaccinations slowed, but it still beat estimates. The Dow component's profit fell 32%, according to MarketSmith.
Chip Stocks Add To Stock Market Weakness
Taiwan Semiconductor reversed sharply higher, as the chipmaker beat third-quarter expectations and guided higher for the current period. The stock had erased nearly all gains from an initial breakout in July 2020.
Applied Materials also sold off early despite positive results. Shares bounced to a 6.6% midday gain. The chip equipment maker beat profit and sales expectations but issued downside Q4 EPS guidance of $1.54 to $1.78 per share.
BlackRock's adjusted earnings fell 13% to $9.55 per share. Revenue fell 15% to $4.3 billion. Both beat analysts' views. The parent of the iShares family of ETFs fell to a May 2020 low before rebounding sharply.
