The Dow finished flat, while the S&P 500 ended three quarters of a percent higher. And the Nasdaq soared nearly 1.7 percent.

The Producer Price index or PPI came in softer than expected, supporting the narrative that inflation is still cooling.

Just a day earlier, hotter-than-expected CPI data sent stocks sharply lower and benchmark Treasury yields to their highest level since November.

While the PPI data was more encouraging, it did indicate that inflation's downward journey might not be on a fast track to the Fed's annual target rate of 2%.

Liz Miller, founder and president of Summit Place Financial Advisors, says investors may be focusing too much on individual pieces of data and not enough on the overall health of the economy:

"I think after the PPI (Producer Prices index) print this morning, investors are rethinking how they recently interpreted the higher CPI (Consumer Price Index) information that we had this month. We're really seeing that the bond and stock markets may have overreacted on the downside. [FLASH] The economy is on the right trend and these stocks are now rebounding today to reflect that investors are being more thoughtful about the longer trend of the economy."

Tech-related momentum stocks led the charge on Thursday, with Apple and Nvidia both finishing more than 4% higher.

Shares of CarMax slid 9% after the company missed analysts' estimates for fourth-quarter results and said it might not meet its long-term vehicle sales target.

Shares of Globe Life tumbled 53% after Fuzzy Panda Research disclosed a short position in the company, alleging multiple instances of insurance fraud.

And shares of Rent the Runway skyrocketed more than 160% after the apparel rental company said it was betting on artificial intelligence to power its current year growth.