Dow rebounds 500 points from worst day since January, S&P 500 and Nasdaq both rise 1.5%

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U.S. stocks climbed on Wednesday, rebounding from steep losses in the previous session as investors picked up major technology shares after the pullback.

The Dow Jones Industrial Average rose 510 points, while the S&P 500 jumped 1.5%. The tech-heavy Nasdaq Composite also popped 1.5% as Apple and Microsoft both rebounded more than 2%. Alphabet and Facebook rose more than 1% each.

"This bull market ultimately has further to run," said Keith Lerner, chief market strategist at Truist. "Investors who are underweight equities should look to average into the market weakness and become more aggressive."

U.S. stocks took a big hit on Wednesday, led to the downside by technology shares as key inflation data showed higher-than-expected price pressures.

The Dow tumbled 680 points on Wednesday to notch its single-worst session since January. The S&P 500 lost 2.1%, its biggest one-day drop since February, while the tech-heavy Nasdaq Composite slid 2.6%.

Traders across the board cited a rise in interest rates, triggered by a hotter-than-expected inflation report, for the midweek slump.

The Labor Department reported that the prices American consumers pay for goods and services accelerated at their fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago.

Investors largely shook off another hot inflation report on Thursday, with producer prices in April jumping more than 6% from a year go.

"We do not think that yesterday's inflation print changes the longer-term case for inflation after the reopening trade, and that is what ultimately matters for markets," AB Bernstein strategist Inigo Fraser-Jenkins said in a note.

Investors have been quick to dump growth stocks amid creeping inflation concerns since rising prices tend to squeeze margins and erode corporate profits. If price pressures run too hot for a sustained period of time, the Federal Reserve would be forced to taper accommodative monetary policy.

Tech, a top-performing sector in 2020 amid the height of the Covid-19 pandemic, has come under pronounced pressure in recent weeks.

The S&P 500 is off by 4% for the week and the Dow is down 3.4%. The Nasdaq Composite is the worst performer among the major averages, off by 5% this week.

Bitcoin dropped 9% after Elon Musk tweeted that Tesla would halt car purchases using bitcoin for environmental concerns, a surprising reversal for the crypto-supporter. Coinbase, which just went public on the promise of crypto-trading becoming mainstream, dropped 2% following Musk's comments.

—CNBC's Maggie Fitzgerald and Patti Domm contributed to this report.

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