Positive CPI Numbers Send Market Soaring

The catalyst that has been looming all week has finally made its mark.

Before the opening bell today the U.S. Consumer Price Index (CPI) numbers were released and came in better than expected.

As prefaced in the previous Simpler Insights recap, the reaction is not a direct correlation between bad data and bad market reaction. The market reacts based on the expectation versus actual numbers. This is why, although the numbers still showed high inflation, they were better than expected and therefore a positive reaction set the market on fire today.

At the release of the data, the market reacted positively to the numbers extending their gains that were slowly building throughout the night into the data release. The S&P 500 futures extended 76 points or by 1.85% as the Nasdaq extended gains by 313 points or 2.4% heading into the cash session open.

When the opening bell rang, market internals were all over the place and looking for a good reset. This caused the market to experience a choppy and non directional open. As structure started to set in, the market began a slight down trend into the early morning part of the session.

After slowly grinding lower for the first hour, the market began to find its feet and work its way back to the pre-market highs and cash session highs in the mid-morning session. 

For the greater part of the day, the market consolidated and found no real directional move as it was digesting the new information that came into the market and allowed the big players to get positioned. The S&P 500 futures traded in a 20-point range for four hours before heading into power hour (the last hour of the day).

During power hour the market provided more of the same. The market continued to fail to make new highs on the day and would not give in to the downside. With roughly 15 minutes left in the cash session, the S&P 500 futures and Nasdaq both made new highs before quickly being rejected and brought back down and settling near the daily highs before the close.

The close for the S&P 500 came in at 4,210.24. This was a gain of 87.77 points on the day or 2.13%. The Nasdaq closed at 12,854.80 points, up 360.88 points for the day or 2.89%. The Dow closed at 33,309.51, up 1.63% and 535 points higher.