Equity markets rebounded on Tuesday following Monday's plunge after CPI data came in as expected and increased expectations for the Fed to hike rates by only 25 basis points at the next meeting. The CPI data shows cooling, but its quality is dubious as inflation remains hot and core inflation accelerated compared to the previous month. In this light, the FOMC should not be expected to let up on economic pressure, even with signs of distress in the financial sector. It is those signs of distress the FOMC needs to see to know its policies are working. The next FOMC meeting is only a week away.

Retail sales will be the news of the day on Wednesday. Retail sales are expected to fall by -0.4% and may come below expectations. In this scenario, the outlook for retail sales and revenue in the discretionary sector will take another hit and drag the outlook for the S&P 500. As it is, the consensus for Q1 earnings has fallen below -6.0% and trending lower. Assuming analyst consensus estimates trend, as they have for the past 2 years, the S&P 500 will post negative growth for the year as well.