You mean the water dies not flow out of the spout and comes up where the spout pivots? That would indicate a couple of things. One would be the "O" ring(s) on the spout have failed, and two, the aerator at the outlet of the spout is plugged. That would also explain why the water comes out of the hot and cold knobs. Try unscrewing the aerator and see how the faucet acts. You may need to clean it like the shower head.