Let those numbers land for a moment. Ten straight days of Nasdaq gains. The S&P 500 back to pre-war levels. Oil below $97 and falling. Rate cut odds at 40% by December. This is not the market that existed three weeks ago.
The PPI this morning came in soft on services, reinforcing the narrative from last Friday's CPI that the inflation shock from the war was real but largely contained to energy. Morgan Stanley's chief equity strategist Mike Wilson said on air this morning that the rotation back into pro-cyclical parts of the market signals that things are going to resolve constructively in the second half of the year. He added that in his view, the lows are in. We covered the ceasefire market reaction and what it meant for sector rotation in our piece from April 8.
The earnings data is supporting that constructive posture. The 20 S&P 500 members that reported results before the official start of this earnings season showed earnings up 76.6% from the same period last year on 15.2% higher revenues, with 75% beating EPS estimates and 85% beating revenue estimates. Goldman Sachs beat on both lines Monday. The direction of travel is clear, and the data backing it is becoming increasingly difficult to argue with.
