Equity markets opened lower on Monday and then seesawed in uncertain action as traders and investors weighed the impact of the latest FOMC decision. The Fed hiked rates by only 25 basis points as expected but indicated a pressing need to fight inflation with higher rates. The takeaway is that the committee is not done raising interest rates, and the peak of rates could be well above what the market expects. The latest inflation data shows a peak in inflation, but there is yet to be a sign of sustained cooling the FOMC can count on.

This week will be tough for the market because it will be all about earnings. In this case, the news will mostly be bad as average S&P 500 companies are underperforming their EPS expectations and lowering the outlook for the rest of the year. In this scenario, the S&P 500 has a dead weight hanging around its neck. The most likely outcome is another sharp decline in index prices that may not cease until the bottom is in for the worsening earnings recession.