Stocks traded with a heavy tone again last week due to rising geopolitical risk, weaker than expected corporate guidance, poor tech sector performance, and strong economic data which effectively reduced the number of rate cuts investors are expecting to see out of the Federal Reserve.

This week’s pivotal report is Monday’s Retail Sales release. Falling short of expectations for two consecutive months, this report reflects a cautious outlook among retailers, marked by disappointing earnings and a growing chorus of warnings about consumer spending. If retail sales disappoint again, signaling trouble for the consumer, brace for heightened volatility, potentially significant, as a slowdown in consumer spending raises the specter of a hard landing.

I’ve been writing the past few weeks about the fact that when valuations get a little ahead of themselves and everyone gets complacent, conditions are potentially ripe for volatility to rear its ugly head. That’s exactly what we got last week as the equity markets digested geopolitical tensions in the Middle East and a bout of tough Federal Reserve rhetoric. In fact, the economic data we received was decidedly positive for growth, however, that can be a double-edged sword when trying to combat inflation.

What’s not to love about a market that keeps making new highs supported by a positive economic backdrop, strong employment and a consumer that wants to get out and spend?