Equities fell hard to start the week with the S&P 500 down more than 1.5% at the low of the session. The move was driven by increasing angst over inflation, the FOMC, and earnings with both a key round of earnings and a key report on inflation due out this week. On the earnings front, there are reports from 175 S&P 500 companies and nearly half of the Dow components on tap. by the end of the week all questions about what to expect this reporting season should be laid to rest. On the inflation front, the April read of the PCE Price Index is due out and it is expected to be another hot one.

Core PCE prices are expected to moderate from up 5.4% in February to up 5.3% YOY in March but nowhere near enough to get the FOMc off the hook for interest rate hikes. At this pace, inflation is up nearly 10% versus 2020 with no signs of it slowing. An as expected or cooler than expected report may keep the market from selling off but, if the figures are hotter than consensus as we expect, the selloff could enter a new phase.