Equity markets advanced on Friday and for the week on signs that inflation is cooling. The takeaway from the data is that inflation has cooled versus last year but remains hot in the present and trending above the Fed's target rate. In this light, the PCE price index news is questionable and ultimately not good news for the market. With inflation still hot and FOMC interest rates rising, the outlook for S&P 500 earnings continues to decline.

This week will be another pivotal week for the market, with reports from over 100 S&P 500 companies on deck and the NFP report on Friday. The NFP report is expected to confirm strength in the labor market and wage inflation, which should keep the FOMC on its toes. In regard to the NFP, the news of the week will come on Wednesday when the committed issues its next policy adjustment. The market is expecting a 25 bps hike but could be surprised by a hawkish commentary, if not another 50 basis point interest rate hike.