Equity markets ended the week on solid footing but there is a risk on the horizon. This week brings the 1st of December and the next round of important economic data. Not only is the market looking for the NFP and other labor data but the November read of the PCE price index is due out as well. The index is expected to show an increase in inflation but at a slower rate than before which will be taken as good news by the market. Looking forward, the pace of inflation is still high enough to warrant additional FOMC interest rate hikes and that is having an impact on the outlook for earnings.

It is the outlook for earnings that will keep the S&P 500 inside of its new range if not moving lower. The consensus estimate for Q4 2022 is already in negative territory and the outlook for the 1st half of 2022 is not far behind it. At the rate the estimates are falling, the market should expect to see Q4 earnings growth in the range of -4% or less by the time the next reporting season is done.