Equity markets closed out a mixed week on a sour note, falling more than 1.0% on Friday. The move was driven by concern inflation was still running hot and that the FOMC would sound hawkish at this week's meeting. The latest round of inflation data included the CPI and PPI, which both showed unexpectedly large accelerations compared to the prior month and year. The risk is that this data and the rise in oil prices will push the FOMC into another series of interest rate hikes.

The S&P shows signs of resistance at a critical level. That level is the range of 4,440 and the all-time high, and it may be a barrier the S&P 500 can not pass. Even without another interest rate hike, the FOMC will keep rates higher for longer, which is a significant economic threat. The longer rates remain high, the deeper the impact on activity, although that is the point. Activity at the current levels is sustaining high inflation levels, and the FOMC can't sit idly by and let it happen.