Explosive Market Rally on Thursday Driven by Lower-than-Expected PPI Inflation Data and Earnings Reports


Simpler Trading Team

3 min read

Explosive Market Rally on Thursday Driven by Lower-than-Expected PPI Inflation Data and Earnings Reports

On Thursday, the U.S. equity markets opened higher with the Dow Jones Industrial Average up 1.08%, the Nasdaq Composite up 1.95%, and the S&P 500 up 1.28%. The explosive market rally was driven by lower-than-expected Producer Price Index (PPI) inflation data and positive earnings reports.

Lower-than-expected PPI Inflation Data

The PPI inflation data for March came in lower than expected, with a reading of 2.7% year-over-year, falling below both the predicted rate of 3.0% and last month’s 4.9%. Excluding the more volatile food and energy, PPI was up 3.4% year-over-year, which is also lower than expected and significantly lower than last month’s 4.8%. This is a continuation of a trend that started 12 months ago, with PPI inflation declining since its peak in March 2022. This lower PPI data suggests that wholesale pricing has decreased, which could indicate that margin pressure is easing for companies that produce goods.

Best Indicators To Capture Today’s Move In NDX

Today’s NDX rally provided a great opportunity for traders. But how could they have taken advantage of it? One strategy involves utilizing the 2 Minute ATR Trailing Stop-loss to enter the trade, and then using the Micro Voodoo Lines (MVDL) on the NDX chart to identify key levels of support and resistance. 

In particular, traders could have looked for the Fireline, a strong level of support identified by the MVDL early in the session, and used it as a guide for their trades. As the market continued to rally, traders could have monitored NDX’s movement using the MVDL as a map and traded until the market closed at the MVDL Skyline, an area resistance.  See the image below

Those interested in implementing this strategy can learn more about the Micro Voodoo Lines indicator by checking out the webinar replay from last night

Will Earnings Reports Drive Positive Sentiment?

The anticipation among traders is palpable as the first-quarter S&P 500 earnings report is set to kick off tomorrow. This report is of utmost importance as it provides a glimpse into the overall health of the consumer and corporations, as well as sheds light on the current state of small and regional banks and credit conditions. All eyes are fixated on the earnings reports and conference calls of major financial corporations like J.P. Morgan, Citibank, and BlackRock. While the expected earnings growth for the first quarter may have some downside, particularly for the third and fourth quarters, the majority of the revisions have already taken place. The current forecast predicts a year-over-year earnings decline of 7.5%, which is significantly lower than the initial expectation of a 1.0% decline at the beginning of the year.

Market Close

At the close of trading, the Dow Jones Industrial Average rose 1.08%, or 368.97 points, and closed at 34015.38. The Nasdaq Composite increased by 1.95%, or 233.54 points, and settled at 12162.87, and the S&P 500 gained 1.28%, or 52.41 points, closing at 4145.63. The market remained in a steady incline heading into the close, with small and mid-cap stocks following the upward trend. SolarEdge Technologies, Wynn Resorts, and Freeport-McMoRan were some of the notable gainers, while Progressive was at the bottom of the S&P 500 index following Q1 results. The DJIA was led by Walt Disney, Apple, and Salesforce, while IBM was at the bottom of the pack.