Broad-based buying lifted equities Tuesday with support from economic data and earnings news. The Dow Jones industrial average rose 1.1 percent, the S&P 500 gained 1.5 percent, and the NASDAQ was up 1.7 percent. US Treasury yields and the dollar were mixed while US oil prices rose.

Equities reacted favorably to a batch of soft economic reports that bolstered hopes for a more accommodative Federal Reserve. Reports included employment costs up 1.0 percent in the fourth quarter, below expectations for 1.1 percent, and consumer confidence two points below most estimates at 107.1, with another decline in consumer inflation expectations. Early weakness in the dollar and lower bond yields provided support.

Earnings spurred gains in parcels & logistics, oil, autos, paper & packaging, and chipmakers, among others. Other advancers included travel & leisure, department stores, and road & rail, and managed care. Megacaps traded higher in line with the market. Defensive plays lagged, in a reversal of Monday's trade, including consumer staples, utilities, telecom, and pharma.

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.