Positive PPI Provides Another Market Push


Simpler Trading Team

Aug 11th 2022  .  2 min read

Once again, heading into the market open there was another positive economic data release that turned into a catalyst. This morning the U.S. Producer Price Index (PPI) data was released giving a further projection of inflation peaking.

The theory on PPI is that it is a forward projecting number that will be projected in the upcoming  U.S. Consumer Price Index (CPI)  numbers. This is because the PPI is giving the inflation numbers that the producers are experiencing and will therefore experience the shift in inflation before their consumer.

The expected PPI was a .2% increase and numbers came in down.5%. This beat expectations and sent the market higher.

Another catalyst that came before the open was jobless claims slightly beating expectations. Job losses came in at 262,000 versus the 264,000 expected, further adding to the story that the decline in the economy has reached at least a short-term peak. 

At the open, traders saw the positive reaction being held and ultimately finding its feet before making a solid and steady move breaking the high of the day and kept trucking. The S&P 500 futures index peaked at 52 points, up 1.2%, before being stopped in its tracks. 

By mid-morning the market had started to lose steam and stall out. After hesitating near the highs of the day the market began to retrace the gains made in the cash session up to that point. After reaching the opening level there was a brief moment in the day where the market consolidated before its next move.

To end the session, both the S&P 500 and Nasdaq raced toward the daily low, continually putting in a new low for the day. Both the S&P 500 and the Nasdaq retraced the pre-market run on PPI and even went negative

To end the day, both the S&P 500 and Nasdaq finished near the daily low. The S&P 500 was able to finish slightly positive. 

The S&P 500 futures ended the day up 4.5 points or .11% whereas the Nasdaq ended the session down 61 points or .46%.