Equity markets beat a hasty retreat after rallying strongly on words from Fed Chief Jerome Powell. The takeaway today is that inflation has peaked but the impacts of FOMC rate hikes are ongoing. In this light, the slowdown in corporate earnings can be expected to worsen and lead to a prolonged earnings recession if not an actual recession. An earnings recession is when S&P 500 earnings decline for 2 or more consecutive quarters despite broader economic growth.

The remainder of the week could be a test for the market. There is not much in the way of economic data due out but there are still many earnings reports to sift through. If the remainder of the reporting season is as poor as the first half has been it is unlikely the S&P 500 will move anywhere but lower.