U.S. equity markets remained under pressure last week amid the seemingly relentless rise in long-term interest rates and the possibility for continued escalation of the conflict in the Middle East. The yield on the 10-year Treasury closed last week at 4.92% and briefly crossed above the key 5% threshold for the first time in over 15 years in this week’s early trading, but it has since eased back toward 4.85%. For the week, the Dow Jones Industrial Average was down 1.57%. The S&P 500 followed suit down 2.38%, and the NASDAQ lost 3.16% for the week. Meanwhile, the Russell 2000 small-cap index tumbled 1.72%.

The sharp rise in long-term yields is doing a lot of the Fed’s work for them in tightening financial conditions. Fed Chairman Jerome Powell and other policy makers suggested last week that they were leaning toward keeping rates steady again at next week’s Fed meeting. Loretta Mester, President of the Federal Reserve Bank of Cleveland, reiterated that the central bank is close to the end of raising rates. In a speech last week she said, “From my forecast I would say we’re within one (rate increase) of the peak, then we can hold it there for a while.” According to the FOMC Fedwatch tool, markets are pricing in less than a 2% chance of a rate hike next week and only 24% odds of one more rate hike before year end.

While high long-term interest rates are expected to have a material impact on economic activity, U.S. economic data broadly has yet to show much sign of yielding under the pressure of rising borrowing costs. Last week, retail sales for the month of September came in at 0.70%, higher than the expected 0.30%. Industrial production for September also surprised to the upside with a strong 0.30% since it was expected to be down 0.10%. Housing starts increased 7% in September over August, though they are still down 7.2% compared to a year ago.

Meanwhile, S&P 500 company earnings reports for the third quarter continued to come in. So far, of the 17% of S&P 500 companies that have reported quarterly results, earnings growth has increased 4.9% compared to a year ago, but the blended growth rate including forecasts for those yet to report is tracking toward -0.7%, according to FactSet. The S&P 500 hasn’t generated positive year-over-year earnings growth since the third quarter of last year.

Earnings season will kick into full gear this week with a third of S&P 500 companies set to report results, including several of the mega-cap technology companies that have driven a large proportion of U.S. equity market gains this year. There will also be a full economic release schedule this week headlined by the first look at U.S. GDP growth in the third quarter. The consensus forecast is that GDP grew a robust 3.7% quarter-over-quarter on an annualized basis.