Stocks oscillated and bond yields ballooned Thursday after a key economic report showed that inflation accelerated to a 40-year high in January.

Surging inflation has been heaping costs on households and businesses, sending the prices of everything from freight to gas to groceries up sharply, and reining it in has become the Federal Reserve’s top priority. Though markets had been apoplectic in recent weeks, sentiments had been improving of late as investors priced in the likelihood of several rate hikes and took in economic data that suggested omicron cast less of a shadow over the economy than many feared.

“Inflation expectations were already high, so the hot read is likely not a welcomed one for the market,” Mike Loewengart, managing director of investment strategy at E-Trade, said Thursday in comments emailed to The Post. “Investors have reacted in textbook fashion recently, selling big tech as Fed tightening looms larger, so we could see volatility today.”

Bond yields exploded in response to the inflation report, with the yield on the 10-year U.S. Treasury note briefly spiking to 2 percent before edging down slightly but remaining well above recent multiyear highs.

The tech-heavy Nasdaq, which has been hit hard by inflation fears, skidded 1.7 percent at the opening bell before recouping some losses. Stocks, especially those in the tech sector, tend to benefit from lower rates as some investors look past higher upfront costs to the likelihood of hefty profits down the line. By midday, it was down about 0.6 percent, as was the broader S&P 500 index. The Dow Jones industrial average was trading down 140 points, or 0.4 percent.

All three indexes had climbed the past few days but remain in negative territory year-to-date, according to MarketWatch.

In the shorter term, data released Thursday by the Bureau of Labor Statistics also showed prices rose 0.6 percent in January compared with December, same as the November-to-December inflation rate, which officials revised upward slightly. Surging costs of food, electricity and shelter helped drive inflation higher last month, with household furnishings, clothing and medical care becoming costlier, while used-car costs continued to spiral, albeit at a slower pace than in prior months.

While the Federal Reserve had pledged to take action against inflation, uncertainty around its course has riled markets in recent weeks. But the reality is that the current inflationary environment is “unconventional,” and fueled in large part by supply chain disruptions that cannot be fixed with tighter monetary policy, Nancy Davis, founder of Quadratic Capital Management, said Thursday in comments emailed to The Post.

“Many of the factors driving inflation higher seem to be caused by supply chain constraints and fiscal stimulus and could naturally fade away on their own,” Davis noted. “However, those factors are taking a lot longer than expected to slow down. At the same time, commodity prices are increasing and further fueling inflation.”

Higher prices seep into “just about everything households and businesses busy,” Gabe Krajicek, chief executive of financial tech company Kasasa, said Thursday in comments emailed to The Post. Total household debt grew by $1 trillion last year, marking the biggest spike in consumer debt loads since 2007, according to a report released earlier this week by the New York Fed.

“Rising prices and inflation are causing consumers to dip further into their lines of credit,” Krajicek noted. “We are also on the cusp of rising interest rates, which will be just another form of inflation as the debt accumulated to this point will need to be paid back at progressively higher interest rates.”

Corporate earnings have been the major force behind market machinations in recent sessions, with performances from big names both sparking steep sell-offs and big rallies. A disappointing report from Meta Platforms last week saw the company shed more roughly $230 billion in market value (a record for a U.S. company) in a sell-off that spread and rattled markets. The next day, Amazon’s value swelled by $191 billion (also a record) after it reported blockbuster fourth-quarter revenue, lifting tech and other sectors alongside it. (Amazon founder Jeff Bezos owns The Washington Post.)

“While the situation has not improved in recent weeks, there has been a clear upturn in sentiment,” Craig Erlam, senior market analyst with OANDA, said Thursday in comments emailed to The Post. “Earnings season came at just the right time and while there have been bumps in the road, investors will reflect on it positively and it’s certainly helped to lift the mood.”

Investors were delivered a trove of good performances that suggested the economy is bouncing back from the pandemic depths.

The Walt Disney Co. rose more than 5 percent in morning trading, lifted by a blowout earnings performance after markets closed Wednesday, including record income from its theme parks and resorts business and healthy growth among its Disney+ subscribers.

Uber Technologies, which also reported after the close Wednesday, rose 1.2 percent in morning trading in response to the ride share giant’s strong earnings and insistence its core business is bouncing back from the pandemic. Its revenue rose 83 percent last quarter.

Coca-Cola’s shares rose more than 1.6 percent after it reported better-than-expected earnings, driven by the return of concession sales at major events, with sales of drinks away from home cresting pre-pandemic levels.

Twitter shares slipped 1.8 percent in morning trading following the social media giant’s earnings miss, as the company said it had mostly sidestepped privacy changes that have hurt its competitors, such as Facebook and Meta Platforms.

Less eye-popping economic data receded into the background: weekly jobless claims continued their downward march, the Labor Department reported Thursday, declining 16,000 from the previous week’s upwardly revised number to settle around 223,000.