More bad inflation news whacked stocks Friday and underscored worries that the Federal Reserve has much more to do to tame rising prices. The Dow Jones industrial average and the S&P 500 both lost 1.0 percent, and the NASDAQ was down 1.7 percent. US Treasury yields, the dollar and oil prices all rose.

News that US core personal consumption expenditures prices, the Fed's favored inflation measure, rose by a nasty 0.6 percent in January with core PCE prices up 4.7 percent, well above expectations, sent US Treasury yields surging, with short-term Treasury bills yielding well above 5 percent. Traditionally risk-free Treasury bills have become a significant rival to equities. The S&P 500 broke notably below 4,000, which has represented good support lately.

Megacaps sold off to lead the decline. Among sectors, worst hit were communications services, information technology, real estate, and consumer discretionary. Holding up best were financials, utilities, and materials. Among Dow stocks, Boeing and Microsoft were notable decliners.

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.