Wall Street staged its biggest comeback in years Thursday, as stocks roared back from steep morning losses caused by a worse-than-expected report on inflation.

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The S&P 500 jumped to a gain of 2.6%, a stunning reversal after earlier being down as much as 2.4% and touching its lowest level in nearly two years.

The Dow Jones Industrial Average swung more than 1,500 points from its low to its high. The turnarounds were the biggest for each index since March 2020.

Other markets around the world likewise veered sharply from losses to gains, while analysts offered possible reasons for the reversal but little that was concrete.

Besides stocks, prices also initially tumbled for bonds and cryptocurrencies in the knee-jerk reaction to a disappointing report from the U.S. government, which showed inflation is spreading more widely across the economy. One component that’s closely followed by policy makers and investors accelerated to its hottest level in 40 years.

That forced investors to brace for continued, big hikes to interest rates by the Federal Reserve to get inflation under control, and the potential recession those moves could create. The Dow Jones Industrial Average fell as many as 549 points shortly after the report’s release, and the Nasdaq was down as much as 3.2%.

The slump didn’t last. Stocks shot up, driving the Dow up 827.87 points, or 2.8%, at 30,038.72. The Nasdaq climbed 232.05 points, or 2.2%, at 10,649.15. The benchmark S&P 500, which was briefly up 3%, rose 92.88 points to 3,669.91. The gains ended a six-day losing streak for the S&P 500 and Nasdaq.

Smaller company stocks also rallied after an initial slide. The Russell 2000 rose 40.65 points, or 2.4%, to close at 1,728.41.

“Anybody who had a hope of a pivot or a pause or a slowing in Fed policy tightening for the next meeting, that’s been dashed today,” said Liz Young, chief investment strategist at SoFi. “I literally can’t even wrap my head around what the logic would be to buy (stocks) on any change in Fed policy.”

Stocks in Europe also flipped from losses caused by the U.S. inflation data, while Treasury yields pulled back a little from their initial surge. The value of the U.S. dollar against other currencies sank after initially jumping.

They’re the latest jagged, back-and-forth moves for markets, which have been swinging sharply due to all the uncertainties about economies around the world and how badly higher interest rates will hurt them.

Analysts said some data points buried deep within the inflation report may be offering hope that inflation is on its way to marking a peak and then easing, even though current conditions look dour. Others said technical reasons could also be helping to support markets, as some investors closed out of trades betting on declines following the inflation report.

“Hopefully it’s because people have dug into the details of the inflation report and noticed a few signs that we could get inflation relief by the end of the year,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

“Markets have talked themselves off a ledge, so to speak, and they’re a bit more hopeful,” said Kristina Hooper, chief global markets strategist at Invesco.

Young noted that the drop in the dollar relative to other currencies, like the British pound, could be a tailwind for stocks, but not enough to cause such a sharp turnaround in the market.

“It’s nonsensical to me that the market would be up so strongly,” she said.

Most investors came into the morning already expecting the Fed to hike its key overnight interest rate by three-quarters of a percentage point next month, which would be its fourth straight hike that was triple the usual size.

But Thursday’s disappointing data caused some investors to expect a fifth such increase in December, dashing hopes that the Fed may begin downshifting soon. Bets increased for the Fed to pull its overnight rate above 5% by early next year. The federal funds rate started this year at virtually zero.

Higher rates make buying a house, car or anything else purchased on credit more expensive, and the hope is that will slow the economy and job market enough to undercut inflation. But higher rates take a notoriously long time to take full effect, and the Fed risks causing a recession if it ends up going too far.

As the day progressed, and investors had more time to dig into the inflation report’s details, though, analysts said they perhaps saw some glimmers of hope. Even though what’s called “core” inflation accelerated last month, overall inflation including food and energy prices slowed by a touch.

The overall Consumer Price Index, also called CPI, was 8.2% higher in September than a year earlier, versus August’s 8.3% inflation.

“If you’re at least starting to see headline CPI cool, there’s hope that core CPI will follow,” Hooper said. “There’s definitely that thought process coming in.”

Quincy Krosby, chief global strategist at LPL Financial, said, “There’s a view that because CPI is a lagging indicator, the higher rates will increasingly slow down the economy and inflation will recede at a faster clip.”

Treasury yields pulled back a bit from their initial, early-morning leaps, lessening a bit of the pressure on stocks.

The yield on the 10-year Treasury, which helps set rates for mortgages and many other loans, rose to 3.96% from 3.90% late Wednesday. Earlier in the day, it topped 4%.

The two-year yield, which moves more on expectations for Fed action, rose to 4.48% from 4.29%. It crossed above 4.50% earlier in the morning.

Higher yields amp up the pressure on the economy not only by making loans more expensive and slowing growth. They also drag down prices for stocks, cryptocurrencies and nearly every other investment because they mean bonds are paying more in interest, which pulls some dollars away from other investments.

Investments seen as the riskiest, the most expensive or forcing investors to wait the longest for big growth have been the ones hit hardest by this year’s rise in rates.