Equity markets pulled back in late day trading on Thursday as the realities of high inflation set in. The January PPI report confirmed that inflation is not only running hot and well above the Fed's target rate but also accelerating again. In this light, the expectation for FOMC easing later in 2023 is misplaced due to a growing need for ongoing action. The risk now is not that the FOMC may cause a recession but that it now needs to cause a recession to tamp down inflation.

Friday's action could tell the tale, is the S&P 500 in a rally that can continue or is it at the peak and about to correct? As it is, the S&P 500 index is having difficulty getting over resistance at the 4,150 level and bearish indications are firming. Another pullback in the price action, given the decline in outlook for S&P 500 earnings, could easily retest the 2022 market lows and even set a new low.