The market sell-off deepened last week and may worsen in the weeks to come if the outlook for earnings doesn't improve. While the Q4 season is unfolding with better than expected earnings for most S&P 500 companies the margin of outperformance is the smallest it's been in two years and getting smaller. By all accounts, inflation is still on the rise and will cut into earnings in the calendar and fiscal 2022 despite higher realized prices for most end-products. What this means for the market is a reset of value and a shift from growth to dividends.

This week will bring the monthly NFP report as well as some key reads on manufacturing and housing. The bulk of the data is expected to support ongoing economic expansion but at a slower pace than in previous months. If the data is weaker than expected or shows a growing impact from inflation, it could help drive equity prices lower.