Equities dropped Wednesday as unexpectedly poor US economic data reports renewed recession worries. The Dow Jones industrial average fell 1.8 percent, the S&P 500 lost 1.6 percent, and the NASDAQ was down 1.2 percent. US Treasury yields were mostly lower, the dollar was mixed, and crude oil prices fell.

Equities were hit by news that retail sales dropped 1.1 percent and industrial production fell 0.7 percent, with manufacturing output down a whopping 1.3 percent, much larger than expected declines. Risk appetite also suffered from more comments from Federal Reserve officials, including St. Louis Fed President James Bullard's remark that the Fed should remain on an aggressive rate hike path.

Megacaps reversed early strength scored on a very soft US producer price report to weigh on the market, and losses were nearly across the board. Among sectors, worst off were communications services, financials, consumer staples, utilities, and health care.

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.