Equities pulled back on Monday on the combination of inflation fear and falling oil prices. The price of WTI fell more than 3.75% intraday to drive a similar decline in the energy sector. With the energy sector expected to post the largest increase in YOY earnings the move in oil prices and the XLE could alter the outlook for the entire reporting season. As for inflation, the March read of the Consumer Price Index is due on Tuesday and it is expected to be historic.

The pace of consumer inflation is expected to hold steady at 0.5% month to month and it could easily top those expectations. the risk for the market is in the YOY comparisons which are expected to accelerate as well. With consumer-level inflation expected to top 6.5% at the core level, the expectations for aggressive FOMC interest rate hikes are going to go through the roof.