Equity markets held within a tight range on Wednesday while investors waited on the NFP report and tried to handicap the odds of another FOMC interest rate hike. The minutes of the last meeting were released in the early afternoon and suggest the Fed will continue to hike rates but at a slower pace than before. This is consistent with the idea the Fed will hike rates by more than an additional 25 basis points but only 1 25 basis point hike per meeting if that much. What this means for the economy is more pressure and higher costs that should send consumer demand into retreat.

The NFP report is due out on Friday. It is expected to show job growth decelerate from the previous month but hold strong near 250,000. While the headline figure will be important, the revisions are also important to note, as is the wage data. The average hourly wage gains are expected to cool slightly to 4.3% YOY which is still hot and underpinning general inflation. The takeaway is that the Fed's job is not finished, and it still has a fight on its hands.

Equity markets tread water on a holiday-shortened trading day at the start of a holiday-shortened week. The S&P 500 traded within a very tight range to close relatively unchanged from the prior week as traders prepare for the holiday and a highly-anticipated NFP read at the end of the week. The NFP is expected to show solid job gains and a decline in inflation that will allow the Fed to continue hiking rates. Additionally, wage gains are expected to continue to underpin inflation and lead to additional interest rate hikes.

The Fed's next move will come later this month. The FOMC is expected to hike rates by 25 basis points and put the core rate at the highest level in over 2 decades, ushering in economic conditions not seen since the 1980s. The consensus is that interest rates will still be higher through the end of the year and put a cap on demand. In this scenario, the recession the market has feared for the last 18 months gets closer to reality.

Equity markets advanced last week as the bear market rally gains momentum. The rally was driven by a trio of good news that amounts to news that is not as bad as expected or news that points to additional rate hikes this year. The takeaway is that the economy and the market remain in transition and will likely top out soon. The question is when and how bad the next correction will be. As it is, the S&P 500 could reach new all-time highs by the start of the peak Q2 reporting season.

This week will be a holiday-shortened week, with the 4th of July on Tuesday. The market volume will be light, but action may be volatile, specifically on Friday when the NFP report is released. The labor data should confirm that labor markets remain tight, but other data, such as wage gains and layoffs, may darken the picture.

Equity markets advanced last week as the bear market rally gains momentum. The rally was driven by a trio of good news that amounts to news that is not as bad as expected or news that points to additional rate hikes this year. The takeaway is that the economy and the market remain in transition and will likely top out soon. The question is when and how bad the next correction will be. As it is, the S&P 500 could reach new all-time highs by the start of the peak Q2 reporting season.

This week will be a holiday-shortened week, with the 4th of July on Tuesday. The market volume will be light, but action may be volatile, specifically on Friday when the NFP report is released. The labor data should confirm that labor markets remain tight, but other data, such as wage gains and layoffs, may darken the picture.

Equity markets tread water this week while traders waited for the May PCE price index to be released. The data is expected to be hot, but it may not matter. The market action suggested the rally would continue with or without a cooler read on inflation, opening up additional risk. The Fed suggests that more than 1 and even more than 2 more rate hikes are needed and that there could be 2 back to back hikes this summer.

As always, the earnings outlook will drive the S&P 500 this year. As it is, the market continues to expect a return to growth in the back half. So long as that remains in the picture, the market should be able to claw its way higher. The question is how high it can go. The Fed is on track to tighten the screws again, possibly leading to more bank failures and the recession hovering on the horizon for the last 12 months.

Equity markets treaded water on Wednesday while traders digested Tuesday's gains. The question on everyone's minds is whether the summer rally will continue or not, and it may be answered on Friday. The May read of the PCE price index is due out and is not expected to give the FOMC much reprieve. The risk for investors is that the market won't heed the message given by the FOMC and continue to rally despite hot inflation. In that scenario, the top of the market may be reached when the FOMC hikes rates again later this year.

The earnings news is less than robust. The latest from General Mills echoes news from Walgreens Boots Alliance in that cautious consumer habits are weighing on the outlook. In the case of General Mills, price hikes continue to offset weak volume and produce growth, but that situation can not last forever, and discretionary names are suffering for it. Nike is scheduled to report after the close of trading today and may shed more light on the matter.

Equity markets advanced on Tuesday, snapping more than a week of declines. The move confirms support at the critical 4300 level and should lead the market higher. The caveat is that summer trading conditions, looming interest rate hikes, and a weak report from Walgreens suggests the rally is built on unstable foundations. Walgreens had a mixed quarter and lowered guidance due to shifting consumer trends. If that sentiment turns into a trend among S&P 500 companies, the index will have nowhere to go but lower.

The week's news will come on Friday when the PCE price index is released. The index is expected to show consumer inflation is moderating but not quickly. At 4.6%, investors should expect the FOMC to continue hiking rates until there is an appreciable decline in inflation. The risk is that getting that decline could mean taking the economy into a full recession.

Equity markets began the final week of June on shaky footing. The S&P 500 hovered within a tight range but closed lower for the session. The move is due in part to caution; the PCE price index is due out later this week and should be a market-moving event. The question is which way the market will move, and the bias now is upward. The index is expected to show core inflation moderating to 4.6% YOY, which is good news, but the FOMC will remain hawkish at this level.

The next few weeks will be trying times for the market. The PCE price index is only 1 worry; after that, there is fear the FOMC will hike rates to the point that it will crack the economy more. Fed members, including Jerome Powell, have indicated that 2 or more hikes are still possible; increases will likely cause more bank failures and consolidation within the financial industry. The only good news is that AI is lifting the tech sector and may continue to do so through the end of the summer.

Equity markets pulled back last week as traders prepare for this week's PCE price index. The price index is expected to show another hot increase in consumer-level inflation and keep the Fed on track to hike rates again. The question is if the FOMC will hike by only 25 basis points or if it will hike another 50 or more, as members have indicated. As it is, the market is only pricing in a single interest rate hike, and it may be surprised by the data this week.

The S&P 500 pulled back and snapped a winning streak, but it is still above the key 4,300 level, so the near-term uptrend is intact. The index may pull back to 4,300 before moving higher, but the stage is set for the updraft to continue. Even with hot inflation, the rise of AI and stimulus-related government spending underpin strength in the tech and industrial sectors and will help the market move higher. The question is how high the market will go before the reality of the Fed's new "normal" is realized.

The equity market rebounded on Thursday, breaking a 3-day losing streak. The rebound shows support at a 2-week low and may lead to another rally, given the right news. The risk is that the summer rally is already peaking due to the renewed fear of FOMC rate hikes. The FOMC has come out with strong rhetoric that inflation is not tamed, more work needs to be done, and 2 or more rate hikes could be on the way.

Next week will be another trying week for the market. The May read of the PCE price index is due out on Friday, and it could be another hot one. If so, the market may be unable to shrug it off as it has in the past. The market, the economy, the Fed, and inflation are heading toward a reckoning that may only produce losers. Odds of a recession stand at 65%.