Equity markets were steady and stable on Monday following the rebound last week. The market is digesting the 6% move posted in the previous week and may move sideways for the next 2 to 3 weeks. This week will bring another onslaught of earnings reports, but nothing that should be significantly market-moving. The next big hurdle will come next week when the retailers start to report, and the latest read on the CPI is released. Another cool figure will reinforce the idea that the FOMC is at or near the peak of the rate cycle and send the S&P 500 back to its recent highs.

The risk for the market now isn't that rates will keep rising but that they may stay at this level indefinitely. Labor markets remain strong, and oil demand and high prices will continue to underpin the cost of goods. Without a demand reduction, the cost of goods will remain high and keep the Fed's foot on the brakes. In this scenario, S&P 500 earnings power will continue to erode and cap upside potential in the index.