Equity markets took a small tumble on Monday falling nearly 2.0% at the low of the day but the S&P 500 managed to claw back the loss by the end of the session. The move was sparked by a growing fear of recession that spilled over into the energy markets. The price of oil fell more than 10% on fear the demand for energy would plummet in the wake of economic contraction and caused a similar decline in oil stocks. Oil stocks led the selling on Wall Street and fell about 6% for the session despite the fact that supply and demand imbalances remain skewed in favor of higher prices.

The impact of high oil prices on consumer spending, profit margin, and corporate earnings will soon be known. The peak of the Q2 earnings reporting season begins next week and could reinvigorate bearish sentiment. The expectation is for margin to contract relative to last year and for earnings growth to be tepid. The risk for the market, however, lay in the guidance due to an expectation for economic improvement in the 2nd half. If the guidance points to ongoing issues the S&P 500 will most likely fall to a new low.