Equities started the day in the green on Thursday but reversed course midday. Remarks from Fed chairman Jerome Powell put the fear of inflation back on the front burner. In his remarks, Mr. Powell said taming inflation was absolutely necessary and that a 50 basis point rate hike was on the table for May. The news caused a sell-off in the ten-year treasury that sent rates to the highest level since December 2018. At the current rate of gain, the rate on the ten-year treasury note will exceed 3.25% by the end of the year. At those levels, bonds become a more attractive investment than the average S&P 500 stock and may become a headwind for equities.

Next week, the market will be fully focused on earnings as well as inflation. Next week is the first really busy week of the reporting season and should bring more than 100 reports from S&P 500 companies. On the inflation front, the PCE price index is slated for release on Friday and should be another hot one despite lapping last year's 3.5% increase.