Equity markets retreat on Thursday after another bad economic report, and earnings from Netflix and Tesla disappointed the market. On the economic front, the Index of Leading Indicators was negative for the 15th consecutive month and worse than expected at -0.7%. That was compounded by a negative reading of the Philly Fed Survey and earnings reports from Netflix and Tesla. Both companies failed to inspire market rallies and saw their shares fall by high-single to low-double-digits, and deeper declines could be coming.

The S&P 500 fell nearly a full percent at the session's low to confirm resistance at this week's high. The move could lead to a larger decline, given the outlook for earnings has taken a hit. If the market can't regain its footing on Friday, selling could gain momentum on Monday ahead of the FOMC meeting. The FOMC is expected to hike rates by another 25 basis points, putting more pressure on the economy. In this scenario, more banks will fail, and the economy will teeter closer to the recession lurking around the corner for the last 12 months.