As traders assessed the latest U.S. inflation data and what it means for the Federal Reserve, stocks rose this Thursday in volatile trading.

A 500-point drop earlier in the day resulted in the Dow Jones Industrial Average climbing 591 points, a 2.03%. The S&P 500 was up 1.83%, and the Nasdaq Composite climbed 1.47%.

Stocks recovered after hitting their lowest levels since 2020, led by energy and bank stock gains. Chevron shares gained more than 3% as oil prices spiked, while Goldman Sachs shares rose 2.9% and 4%.

The move higher was also driven by a reversal in Apple's and Microsoft's stocks and a surge in semiconductors Nvidia and Qualcomm. Furthermore, investors may bet that prices will peak soon based on the stronger-than-expected inflation report.

"We get this last gasp higher in inflation, and from here, we start to decelerate," said Liz Ann Sonders, the chief investment strategist at Charles Schwab.

However, it was mentioned that stock swings are expected as investors respond to inflation data and more earnings season information is revealed.

"I think there's still plenty of things that could drive volatility, and intraday swings are just the nature of the beast right now," She added.

Shares slid to session lows after publishing a September Consumer Price Index report. It said that the Consumer Price Index increased by 0.4%, much larger than the 0.3% forecast by Dow Jones. The rate of inflation rose by 8.2% over the past year.

After Wednesday's news about a surprisingly high producer price index, Thursday's Consumer Price Index is no surprise.

After the September Federal Reserve meeting minutes on Wednesday, investors assessed that the central bank would keep raising rates until it sees less inflation. But one person suggested the Fed might slow its rate hikes if the tumult continued in financial markets.

With earnings season underway, investors will watch carefully as major banks like JPMorgan Chase, Wells Fargo, Morgan Stanley, and Citigroup report their results.

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