Stocks recovered from lows reached earlier on Thursday, with investors buying the dip once again in spite of a dour wholesale inflation report.

The late-day gains mean the S&P 500 notched its third straight record close, by the slimmest of margins, settling up 0.03% at 6,468.54. The Nasdaq Composite and Dow Jones Industrial Average were marginally lower, with the tech heavy index ending the day down 0.01% at 21,710.67, and the 30-stock Dow losing 11.01 points, or 0.02%, to close at 44,911.26.

The S&P and Nasdaq were both down 0.4% at their lows before bouncing back. The Dow shed more than 200 points at one point. The major averages were hurt by July's producer price index reading, which suggested that a Federal Reserve rate cut is far from guaranteed.

Wholesale prices rose 0.9% on the month, much more than the 0.2% economists polled by Dow Jones were expecting. The index had come in flat in June. Wholesale prices can be a leading indicator for consumer prices.

To be sure, some traders looked past this PPI number because the report showed the increase was driven by a large gain in "portfolio management," along with airfare. Without those factors the figures would have been much closer to estimates.

Despite the higher inflation number, fed funds futures were pricing in about 93% odds of a rate cut in September, only slightly lower from the day prior, according to the CME's FedWatch tool. The futures, however, did remove any chance of a half-point cut.

"It seems to be reasonably clear at this point that this wasn't enough to get the Fed off of another cut, or get it going on a cutting cycle," said Scott Ladner, chief investment officer at Horizon Investments. "I think people are just like, yeah, this was not a great PPI print — certainly not what you want to see. But we're going to want to see a couple of them before we really think that we're getting sort of a reaccelerating inflation environment, which is really the thing that can knock the Fed off course."

Investors came into the session riding high, with the S&P 500 and Nasdaq posting fresh record highs in the previous session. The benchmarks got a jolt earlier this week after the release of a cooler-than-expected consumer price inflation report for July.