Equity markets started the week on a sour note with the S&P 500 falling more than 2.0% at the session's close. The move was driven by the reacceleration of inflation, rising interest rates and the new expectation this week's PCE price index will be hotter than before. In this light, the FOMC can be expected to continue raising interest rates and now another 50 basis point hike is back on the table.

Although labor markets indicate economic activity is still vigorous in the US, there is a shift from higher-paying quality work into lower-paying service jobs. This is fueling a contraction in S&P 500 earnings that is only going to get worse as the year progresses. With consensus estimates for S&P 500 earnings trending lower and nearing the 0.0% mark, it is likely the market will continue falling this week.