Equity markets pulled back on Wednesday as fear of rising interest rates came back to a boil. The latest Services and Manufacturing ISM reads suggest that economic momentum remains solid, and prices continue to rise. Prices in both indices showed significant upswings tied to the cost of oil. Oil prices rose to a new high last week and will continue to underpin inflation this year.

This means an increased chance for another 25 basis point rate hike his year. The odds of a hike in September remain low, but there is a 50% chance of 1 in November, which could rise over the next 2 weeks. The CPI data is due next week and will likely show inflation remains hot if not accelerating. An accelerating CPI will just about seal the deal on another rate hike and put a firm cap on the market. As it is, the S&P 500 shows resistance at a critical level and is set up for a fall.