Equities broke out of a downtrending channel to the downside last week in evidence of mounting fear about the economy. The FOMC was forced to hike rates by 75 basis points in what some would call a surprise move. Others, however, would say the FOMC is still behind the curve and that at least one more if not two more 75 basis point hikes were needed. Regardless of the pace, the takeaway for the market is that inflation is still out of control and aggressive rate hikes are making the cost of business more expensive. In this scenario, economic activity can be expected to contract and there is evidence of that already. The Index of Leading Indicators fell for the second month by -0.4% suggesting an economic recession is already in play.

This week will be a hurdle for the market because of how little new information is set to be released. On the economic front, there are only two data points due out and both are from the housing sector. On the earnings front, there are only a handful of confirmed reports and very few from companies other than home builders.