Equity markets pulled back on Tuesday as traders brace for the FOMC meeting and policy statement on Wednesday. The FOMC is expected to raise rates by 75 basis points and there is hope they will tone down their stance although there is risk in that outlook. The latest PCE price index showed inflation was still accelerating which is no reason for the Fed to slow the pace of interest rate hikes. At best, the FOMC will hike by 75 basis points and maintain its current outlook.

Also on tap this week is the NFP report. The NFP is expected to come in near 200,000 which would be a dramatic slowdown from the pace of late. In this scenario, the FOMC may be allowed to slow the pace of hikes at the upcoming meeting but more data is needed. The next big inflation report is due out in two weeks with the CPI and it could be news to move the market.