Equities improved Tuesday, led by strength in select megacaps, but sentiment appeared cautious ahead of news. The Dow Jones industrial average firmed 0.6 percent, the S&P 500 gained 0.7 percent, and the NASDAQ advanced 1.0 percent. US Treasury yields and the dollar were mostly higher while crude oil prices rose.

Markets edged up in the morning in a relief trade after Federal Reserve Chair Jerome Powell avoided discussion of policy matters in an appearance the Swedish Riksbank. Trading was tentative ahead of US consumer price figures due for release Thursday morning, and risk assets somewhat vulnerable after rallying last week on hopes the inflation picture is improving. Investors are also starting to fret about fallout from possible delay in the US debt ceiling extension given the political dynamic around House Speaker Kevin McCarthy's accession to his leadership position. Treasury Secretary Janet Yellen now reportedly plans to stay in her post to help cope with the problem.

Among megacaps, Amazon and Facebook were among the day's best performers despite the uptick in bond yields. Sectors were mixed with best showing coming from communications services, consumer discretionary, health care, industrials, energy, and materials. Lagging were consumer staples and utilities.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.