Equity markets surged on Friday after the NFP report showed wage growth slowed. The S&P 500 gained more than 2.5% on the news, but traders are warned to caution. The wage growth has slowed, but the remainder of the labor data remains hot, including the JOLTs report on job openings. At the current levels, job openings will continue to spur upward mobility for many Americans and wage inflation simultaneously.

This week could be a big one for the market. Not only does the Q4 earnings season kick off on Friday, but the CPI report is due that day too. It may confirm a peak in inflation, but it will probably not show a sustained downtrend until later this year. The risk is that it will be hotter than expected and leave the FOMC with little choice but to keep raising interest rates. In this scenario, the outlook for S&P 500 earnings will take another hit, and the index may fall along with it.