Stocks bounce back from inflation-driven losses

Stocks bounced back Thursday morning from two days of heavy losses as investors returned to technology stocks in the face of rising inflation.

The tech-heavy Nasdaq composite closed with a gain of more than 1.2 percent after falling nearly 3 percent Wednesday. The Dow Jones Industrial Average closed more than 430 points higher, rising 1.3 percent, and the S&P 500 index notched a gain of 1.2 percent.

Wall Street’s Thursday rebound turned the page on two rough days for the market driven in part by an unexpectedly high jump in inflation. 

The consumer price index, a closely watched gauge of inflation, rose 0.8 percent in April and 4.2 percent in the year leading into last month, rising at the fastest annual rate since a 4.9 percent jump in September 2008. The producer price index, a measure of how much manufacturers charge for their goods, also rose a seasonally adjusted 0.6 percent in April.

While measures of inflation were expected to show sharp annual jumps from the low of the pandemic and the impact of supply shortages, the larger-than-projected increase caused some alarm among investors before Thursday’s rebound.

Even so, many economists share the Federal Reserve’s expectation that inflation will settle down once producers are able to scale back up to meet a rush of demand created by the easing pandemic.

Updated 4:37 p.m.

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