Equities started August on uncertain footing, trading in a very tight range just below July's closing level. The move smacks of indecision and now wonder; with the PCE index rising to the highest level in 30 years, the outlook for the FOMC has only gotten darker. The committee indicated a slowdown in the pace of interest rate hikes just a few days earlier, and now the odds are growing for another 75 basis point hike in September.

This week, all eyes will be on earnings and the NFP report on Friday. On the earnings front, the revisions to the outlook for Q3, Q4, and next year are in near-freefall, and more bad news is expected. On the economic front, the NFP is expected to show a slowdown in the pace of hiring and another month of low-single-digit increases in wages.