Equity markets continued to sell off last week despite some better-than-expected earnings reports. The move was driven by hot economic data that points to persistent GDP growth, consumer demand, and inflation. With the FOMC meeting slated for the week, the risk is that hawkish Fed rhetoric will intensify and may telegraph the next policy move as an increase in rates. In this scenario, the S&P 500 could shed another 10% or more before hitting its bottom.

The S&P 500 shed more than 2.5% for the week, bringing the index below the critical 4,150 level. If the market doesn't snap back this week, the odds are high that the selling will continue. The question now is what could turn this market around, and it looks like it will take a great deal. The market may not be able to regain its footing until later in 2024 once the economic headwinds subside and inflation is finally tamed, or not.