Equities advanced Friday on renewed optimism that negotiators will reach an accord to raise the debt limit in time to avoid default. The Dow industrials rose 1.0 percent, the S&P 500 gained 1.3 percent, and the Nasdaq was up 2.2 percent. US Treasury yields, oil prices, and the dollar all rose.

Reports suggesting the two sides were likely to strike a deal soon bolstered stocks through much of the day. Reports late Friday suggested some remaining sticking points and raised worry that congressional leaders might not be able to deliver the votes needed to approve the plan.

In economic news, an unexpectedly hot inflation reading in the core personal consumption expenditures price index pushed up bond yields and bolstered expectations for a Federal Reserve rate increase in June or July.

Despite higher yields, megacaps were among the day's top performers, which helped communications services, consumer discretionary, and information technology outperform. Other strong sectors included materials and industrials. Lagging were health care, utilities, and energy.

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.