S&P 500 rises, Nasdaq closes 2% higher on rebound from inflation report rout: Live Update

Stocks rose on Wednesday amid a flurry of choppy trading as investors weighed what the latest U.S. inflation data meant for Federal Reserve policy. Tech shares led a rebound from steep session lows.

D S&P 500 1.07% to close at 5,554.13. Wednesday marked the first time since October 2022 that the broad market index fell 1% on an intraday basis and then rose more than 1%.

30-stock Dao It added 124.75 points or 0.31% to end at 40,861.71. At its lowest, the blue-chip index lost as much as 743.89 points. D Nasdaq Composite It added 2.17%, erasing its earlier losses to close at 17,395.53.

Investors lifted shares of mega-cap tech and semiconductor names in afternoon trade, lifting the Nasdaq. Nvidia 8% by leaps and bounds AMD Added about 5%. D VanEck Semiconductor ETF (SMH) increased by about 5%.

Bank stock, incl JP Morgan Chase And Goldman SachsAlso rebounded from earlier lows and ended the session with marginal gains.

Stocks initially took a hit after a key reading of the consumer price index – which strips out the volatile food and energy sectors – rose slightly more than expected. This dim investor is expecting a half-point rate cut from the Federal Reserve. Traders are now pricing in an 85% chance that the central bank will approve a 25 basis-point interest rate cut at its Sept. 17-18 meeting, according to CME Group's FedWatch gauge. The overall CPI, however, reached its lowest annual level since February 2021.

“Taken by myself, [CPI] That's not terrible,” said Steve Sosnick, chief strategist at Interactive Brokers. “But what the market didn't need was a key reading that beat expectations. I think it's a big splash of cold water in a market that was optimistic that a 50 basis-point rate cut could be on the cards. Those expectations have all but evaporated.”

The new data comes as investors grapple with seasonal headwinds. September was the worst month for the S&P 500 in the past 10 years, with an average loss of more than 1% over that period. The broad market index has posted a loss in September in the past four years.

D CBOE Volatility Index Briefly traded above 20 before returning to 18.