Equity markets are showing signs of caution if not topping in the face of a declining outlook for Q4 2022 and 2023 earnings for the S&P 500. The action on Tuesday had the market up from the open but moving sideways from Monday's action with resistance just above the 4,000 level. The caution is due to a raft of economic data that is due out Wednesday through Friday that culminates with the PCE price index on Friday. The index is expected to accelerate on a sequential basis but to decelerate versus last year which is a mixed signal indeed. A slowdown in YOY inflation is good but it doesn't mean much with inflation still running at more than double the Fed's 2.0% target and accelerating in the near term.

News that didn't get much attention on Monday is the Index of Leading Indicators. The Index of Leading Indicators fell by -1.0% and 0.3% faster than expected. This is just shy of the worst reading in the last few years which was last month and points to increasingly weak conditions within the US economy.