Equity markets advanced on Tuesday, snapping more than a week of declines. The move confirms support at the critical 4300 level and should lead the market higher. The caveat is that summer trading conditions, looming interest rate hikes, and a weak report from Walgreens suggests the rally is built on unstable foundations. Walgreens had a mixed quarter and lowered guidance due to shifting consumer trends. If that sentiment turns into a trend among S&P 500 companies, the index will have nowhere to go but lower.

The week's news will come on Friday when the PCE price index is released. The index is expected to show consumer inflation is moderating but not quickly. At 4.6%, investors should expect the FOMC to continue hiking rates until there is an appreciable decline in inflation. The risk is that getting that decline could mean taking the economy into a full recession.