Stocks closed sharply higher yesterday after a much better than expected PPI inflation report.

The Producer Price Index (PPI) showed headline inflation down -0.5% m/m vs. last month's -0.1% and the consensus for no change (0.0%). On a y/y basis it came in at a sharply reduced 2.7% vs. last month's pace of 4.6%. The core rate (ex-food & energy) fell -0.1% m/m vs. last month's 0.0% and the consensus for a gain of 0.3%. On a y/y basis it came in at 3.4% vs. last month's pace of 4.4%. That's a big drop, not just from last month (down -1.0 percentage point), but also from last year's high of 8.2% (-4.8 percentage points).

And stocks soared on the news.

That also underscores the narrative that inflation has fallen substantially, and is likely to continue to fall, thereby giving the Fed the opportunity to wrap up their rate hike cycle at their next FOMC meeting on May 3.

We still have another inflation report in 2 weeks (April 28), with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. But so far, inflation is heading in the right direction. And that bodes well for winding down the rate hikes.

In other news, yesterday's Weekly Jobless Claims rose 11,000 to 239,000.

Today we'll get another look at the economy with the Retail Sales report, Industrial Production, Business Inventories, and Consumer Sentiment.

And earnings season unofficially begins with some of the big banks on deck including JPMorgan Chase, Citigroup, Wells Fargo, PNC Financial, and BlackRock to name a handful. Next week we'll hear from the regional banks.

In the meantime, the major indexes are poised to close up for the week. That would make it 4 weeks in a row for the Dow, and 3 out of 4 weeks for the S&P and the Nasdaq.

YTD, the Dow is up 2.66%, the S&P is up 7.99%, and the Nasdaq is up 16.2%.

Since last October's key upside reversal, the Dow is up 18.5%, the S&P is up 15.9%, and the Nasdaq is up 19.1%.

Pretty impressive. And it looks like there could be a lot more upside to go.

So make sure you're taking full advantage of it.

Best,