Equity markets deepened their sell-offs after another round of good-news-is-bad-news. The Q3 GDP was hotter than expected on consumer spending, business inventories, building activity, and government spending. The takeaway is that the data may not lead the Fed to hike rates again, but it cements the idea that rates will stay high indefinitely. The US consumer is resilient and continues to spend in the face of higher prices; it may take some time for it to run out of momentum.

The next big hurdle for the market is today's reading of the PCE price index. The index is expected to accelerate from the prior month and may be hot enough to keep the market moving lower. If so, the S&P 500 could shed another 5% to 10% before hitting a firm bottom. Earnings will also be a factor in Friday trading. Reports from names like Amazon, Exxon, and Chevron are due before the open and will be market-moving events.

Equity markets continued to sell off on Wednesday following stronger than expected New Home Sales. The pace of new home sales surged in September as prospective buyers tried to front higher interest rates. The news would otherwise be good equities but reveals sustained demand in the housing market that will underpin high home prices and inflation. The S&P 500 shed nearly 1.5% at the low of the session, setting a new low, and it appears ready to move lower again later this week.

The next 2 days will be trying for equity markets. The Q3 GDP read, September retail sales, and the PCE price index are due, and all are expected to be hot. In this scenario, the FOMC will keep interest rates high, and the risk of additional increases grows. Recent comments from JPMorgan CEO Jamie Dimon suggest that another single 25 basis point hike will be insufficient to cap inflation, and multiple hikes are still ahead. The odds that the FOMC will break something in that scenario are insurmountable.

Equity markets rebounded on Tuesday as treasury yields advanced, and better-than-expected earnings from Verizon helped calm frayed nerves. Verizon's results were mixed with revenue as expected, but profitability was better than expected, and free cash flow guidance was raised. The news sparked an 8% rise in the share price as investors scooped up the deep value and high yield the stock had to offer.

The S&P 500 gained about 1% at the session's high to reveal support at a critical level. The caveat for traders and investors is that the rebound is tepid in light of the previous correction and the outlook for PCE prices on Friday. The PCE Price Index is expected to accelerate from the prior month and reinvigorate the idea more interest rate hikes are coming. In this scenario, Tuesday's rebound is nothing more than a relief rally within a downtrend, and the downtrend will likely continue before the week is through.

Equity markets slipped at the open on Monday but regained their footing to close the session near flat for the day. Mounting worries linked to geopolitical tensions, inflation, and rising interest rates are to blame, but investors remain resilient. This week will bring many earnings reports, so the market is hopeful. The risk is that earnings will be better than expected but offset by weak guidance.

Economic data is another risk this week. There are several reports on the calendar, including the Q3 GDP but the only thing that matters is the PCE price index on Friday. The PCE price index is expected to accelerate at the core level and may come hotter than expected. Oil prices have risen significantly since the summer, helping sustain high inflation levels. Another hot read on the PCE will give more cause for the Fed to hike rates again and could spark a sell-off in equities.

Equity markets pulled back last week, casting a dark shadow on the near-term outlook. The S&P 500 fell more than 2.25% to create a Bearish Engulfing Pattern that confirms resistance at a lower level than before. This shows bears advancing on the back of increasing risk and the odds of another FOMC interest rate hike. War in the Middle East threatens to spur inflation as the government ramps up aid and military spending.

This is going to be another trying week for equity markets. The PCE Price Index is due on Friday and will likely show persistently high inflation. The risk is that high oil prices will show in the data, and inflation will accelerate. In this scenario, the FOMC will have no choice but to hike rates again, and it could come as soon as the end of the year. A hot read on the PCE could send the S&P below critical support and open the door to another 5% decline.

Equities markets began the day in the green on Thursday but reversed course later. The combined impact of rising oil prices and hawkish Fed-Speak sapped bullish sentiment and drove the S&P 500 down more than 1.0%. Oil prices climbed 2.5% despite easing sanctions on Venezuela. The news is good, but it will be years before Venezuela's oil infrastructure can support large-scale production. WTI has confirmed support at a key level and will likely move higher and underpin inflation.

In other news, Fed chief Jerome Powell says inflation is still too high. In his view, economic growth may have to slow for inflation to hit the 2% target, meaning high rates will be here indefinitely. The risk now is that oil prices will keep the Fed on the brakes, leading to another interest rate hike. In this scenario, more banks fail, and economic slowing could result in a full-blown recession. As it is, the US is only expected to grow by 1.5%, which is far less than the pace of inflation.

Equity markets retreat on Wednesday on a double dose of bad news. On the earnings front, better-than-expected earnings are offset by weak guidance, while on the economic front, the yield on the 10-year treasury rose to another new high. The 10-year rise suggests the FOMC will continue to hike rates to near 5.0% in its fight against inflation. The Fed needs to see a significant decline in demand to ensure inflation is tamed, which has yet to be seen in the data.

The S&P 500 fell more than 1.25% at the session's low, showing persistent resistance at the short-term 30-day EMA. If that level can't be crossed, the market will likely fall. The decline could build significant momentum if the guidance continues to be negative. The S&P 500 could fall back to the recent low or lower in this scenario. Critical support is near 4,224 for the S&P, a move below there could produce another 5% decline for stocks.

Equity markets were mixed on Tuesday as investors brace for an onslaught of earnings reports. The bulk of S&P 500 companies will report earnings over the next 4 weeks and provide a deep look into the state of the economy. The expectation is for earnings growth to resume; the question is how inflation and high-interest rates impact the outlook. If the S&P 500 performs better than expected but guidance is lowered, the market is likely to fall.


The S&P opened lower on Tuesday but moved higher early in the session. However, the advance was capped below 4,400, the critical line to cross. If the market can not get above that level soon, another correction is likely. The sell-off could become profound if the correction coincides with poor guidance or other bad news. Other potentially bad news on the horizon is the September read of PCE prices and the upcoming FOMC meeting.

Equity markets advanced on Monday, extending the rebound that began last week. Mixed news has investors on edge, but bank earnings suggest a solid reporting season for the S&P 500, lifting it by more than 1.0%. If the index can post earnings growth, it will be the first time in several quarters, putting the index on track to extend the 2023 gains in 2024. The question is what kind of guidance the reporting season will bring, and the odds favor downward revisions. In this scenario, lift the market gets from the Q3 reporting cycle could be short-lived.

The market is bracing for a week filled with economic reports, Fed-speak, and earnings reports. Releases due include Philly Fed and Empire State manufacturing surveys, retail sales, the Beige Book, and at least 11 speaking appearances by Fed members. Any of these events may include insight into the Fed's next move. Because the market is still undecided about the peak of rates, unexpected news of any kind could spark market volatility including rallies or corrections.

Last week, equity markets showed tremendous resilience when faced with mounting headwinds. Geopolitical tensions, hot inflation, and a hawkish Fed did little to sway sentiment. The S&P 500 closed relatively flat for the week but up from the session's close and showing support at a critical level, and it may move higher this week. There are several potential headwinds, including the ramp of earnings season, which got started with a bang.

Reports from the Big Banks were better than expected and revealed that too big to fail keeps getting bigger. The takeaways from the results are solid revenue growth, margin expansion, double-digit earnings growth, balance sheet strengthening, and capital returns. However, this week brings reports from dozens of small and mid-sized banks that may not fare well. Other reports include trucking outfit J.B. Hunt Transportation Company and Tesla. The analysts set the bar low for each, so outperformance is expected.