By Caroline Valetkevitch
NEW YORK (Reuters) – U.S. stocks surged to close more than 2% higher on Thursday, as technical support and investors covering short bets drove a dramatic rebound from a selloff earlier in the day.
The reversal marked a jump of nearly 194 points in the S&P 500 from its low of the session to its high, the biggest intraday jump for the index since Jan. 24.
Financials and energy led gains among S&P 500 sectors.
The market initially dropped after data showed the headline consumer price index rose at an annual pace of 8.2% in September, compared with an estimated 8.1% rise.
“People were perhaps net short going into the CPI report, and saw the report being negative and started covering their shorts,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.
Some strategists also pointed to some technical support levels around the 3,500 mark for the S&P 500.
The Dow Jones Industrial Average rose 827.87 points, or 2.83%, to 30,038.72, the S&P 500 gained 92.88 points, or 2.60%, to 3,669.91 and the Nasdaq Composite added 232.05 points, or 2.23%, to 10,649.15.
“It’s technical factors,” Lip said, adding that the recent steep selloff in stocks may mean “bad news may have already been discounted.
“Going into earnings season, all we really need is things to be not as bad as suspected,” he said.
Big Wall Street banks kick off third-quarter reporting season on Friday, with investors awaiting to see how a high interest-rate environment affects their profits.
Walgreens Boots Alliance Inc rose following better-than-estimated fourth-quarter results.
Advancing issues outnumbered declining ones on the NYSE by a 2.24-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favored advancers.
The S&P 500 posted three new 52-week highs and 172 new lows; the Nasdaq Composite recorded 51 new highs and 600 new lows.
Volume on U.S. exchanges was 13.39 billion shares, compared with a roughly 11 billion average for the full session over the last 20 trading days.
(Additional reporting by Bansari Mayur Kamdar, Ankika Biswas and Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty, Anil D’Silva, Arun Koyyur and Deepa Babington)
