Equity markets extended their slide on Tuesday falling not only to the lowest levels for 2022 but to the lowest levels in nearly two years as the market begins to accept the fact the FOMC is causing the US to fall into a deepening recession. The S&P 500 index fell more than 0.75% at the low of the day to break the key 3636 level and put the index on track to retest the lows set during the peak of the pandemic fear.

The next few days will be of utmost importance for the market. With the index set to make a technical retreat and the PCE price index due out on Friday the odds are high that the sell-off could begin to gain momentum. In this scenario, the S&P 500 could retreat as far as the 3,200 level before the peak of the Q3 earnings reporting season. If the report is better than expected, however, the market could stage another significant relief rally.