Investors expect concerns about hot inflation and strapped consumers to dominate the corporate earnings season that kicks off this week creating winners and losers in the battered stock market.

Stocks have come under pressure this year with inflation hovering at a four-decade high in the Federal Reserve in the midst of an aggressive campaign to raise interest rates to rein it in. The s&p 500 has fallen 18% in 2022 Even after rallying 3% to start July.

Tightening monetary policy has slashed the rich valuations that stocks carried at the start of the year leading to earnings growth as a key pillar of support. The reporting season for the second quarter will mark the latest test for the market as investors assess how profits have held up and how companies are navigating the second half of the year.

Companies are battling headwinds on multiple fronts. Elevated input costs and challenging labor and supply chain environments are weighing on earnings. Consumer spending has cooled as Americans deal with high prices at the pump and the grocery store.

And a strong dollar has made our products less affordable. Abroad, cutting into international sales. It’s going to be a pretty bifurcated earnings season, said Keith Lerner, co-Chief Investment Officer, and Chief Market Strategist at truest advisory services. It’s going to be a story of who doesn’t have that pricing power, and there’s going to be more differentiation.