The Dow Jones Industrial Average gained 124.75 points, or 0.31 percent, closing at 40,861.71 after falling by as much as 743.89 points earlier in the day. The Nasdaq Composite rose by 2.17 percent, erasing its earlier losses and closing at 17,395.53.
Investors purchased shares of mega-cap technology companies and semiconductor firms in the afternoon, boosting the Nasdaq. Nvidia climbed 8 percent, while AMD added nearly 5 percent. The VanEck Semiconductor ETF (SMH) also gained approximately 5 percent.
Bank stocks, such as JPMorgan Chase and Goldman Sachs, recovered from earlier losses and ended the session with minor gains.
Stocks initially dropped after the core consumer price index (CPI), which excludes volatile food and energy categories, rose slightly higher than expected. This result diminished investor hopes for a 50 basis-point rate cut by the Federal Reserve.
Traders now expect an 85 percent chance that the central bank will approve a 25 basis-point rate cut at its September 17-18 meeting, based on the CME Group’s FedWatch tool. However, the overall CPI reached its lowest annual level since February 2021.