Fearful equity markets pulled back more than 1.0% on Tuesday following dire news from Walmart. Walmart missed its earnings estimates and cut its guidance, citing the impact of inflation on consumer spending. While sales of food and other staple items continue to be strong, sales of discretionary items are flagging under the weight of inflation. The news was taken as a sign of weakness in the broader economy and had the market shedding discretionary and other inflation-sensitive names with the FOMC and key inflation just due out this week.

The FOMC is expected to hike rates by at least 75 basis points today and may go for a full 100 basis points in an effort to outrun inflation. Regardless, the economy is already in a recession, and it looks like inflation and Fed action are going to make it deeper. The PCE index is due on Friday and is expected to show an acceleration from the previous month.