Stocks rose higher on Thursday after December's consumer price index (CPI) report showed inflation cooled last month, boosting market optimism that the Federal Reserve will soon slow interest rate hikes. The Dow Jones Industrial Average climbed over 200 points, while the S&P 500 Index and Nasdaq Composite added 0.3% and 0.6%, respectively.

Here's how the market settled on Thursday:

S&P 500 Index (SPY  ): +0.34% or +13.56 points to 3,983.17

Dow Jones Industrial Average (DIA  ): +0.64% or +216.96 points to 34,189.97

Nasdaq Composite Index (QQQ  ): +0.64% or +69.43 points to 11,001.10

Thursday's moves came after data from the Bureau of Labor Statistics showed prices last month decreased 0.1% month-to-month and increased 6.5% at an annual clip; the data was inline with economist expectations.

Moreover, so-called Core CPI, which excludes food and energy prices, rose by 0.3% month-to-month in December and 5.7% annually -- also in-line with economist forecasts.

December's CPI data is considered the last major inflation report the Federal Reserve will consider before its next monetary policy meeting on January 31. Policymakers have reiterated in recent weeks that they do not plan to ease the central bank's hawkish monetary policy, with Fed Chair Jerome Powell stressing on Tuesday that the Fed will take all necessary actions to stabilize prices, even if they are unpopular.

Elsewhere in economic data, initial jobless claims for the first week of 2023 came in at a less-than-expected 205,000, compared to expectations of 215,000. Moreover, continuing unemployment filings also decreased week-to-week to 1.63 million from 1.694 million in the prior week.

For stocks, Disney (DIS  ) was in the spotlight on Thursday as the entertainment giant faces an upcoming proxy battle for activist investor Nelson Peltz after shareholders voted against Peltz joining the company's board of directors.

JPMorgan Chase (JPM  ) announced Thursday it had shutdown its college financial aid platform, Frank, it purchased for $175 million after claiming the company's founder created nearly 4 million fake customer accounts.

Meme stock investors continued to buy up shares of retailer Bed Bath & Beyond (BBBY  ) on Thursday, with shares rising over 50%. The stock is up more than 200% for the week following news that the company is exploring potential Chapter 11 bankruptcy.

On the earnings front, KB Home (KBH  ) shares fell about 3% after the homebuilder reported a miss on revenue and profits as net orders declined and the company posted a significant backlog of homes. American Airlines (AAL  ) rose nearly 10% after the carrier increased its earnings guidance for the fourth quarter, now expecting adjusted earnings per share of $1.12 to $1.17 from a previous estimate of $0.50 to $0.70.

Looking ahead, big banks like JPMorgan, Bank of America (BAC  ), Citigroup (C  ) and Wells Fargo (WFC  ) are salted to report quarterly earnings on Friday. Delta Air Lines (DAL  ) is also scheduled to report.