Equities extended their recent gains Monday with strength building through the day ahead of consumer price data due Tuesday and the Federal Reserve policy announcement on Wednesday. The Dow industrials rose 0.6 percent, the S&P 500 gained 0.9 percent, and the Nasdaq advanced by 1.5 percent. US Treasury yields fell, the dollar rose, and oil prices dropped.

Equities drew support from a strong showing in US Treasuries as the market has absorbed heavy new issuance since the debt ceiling extension. Stocks were also bolstered by expectations for the Fed to hold off on further rate increases at Wednesday's policy announcement.

The advance has broadened from megacaps, which have underpinned the major indexes lately, to include small caps, with investors evidently impressed with the string of stock market gains, and and high-profile analyst calls for more.

Most sectors rose, with technology leading, along with communications services and consumer discretionary. Energy was the day's big loser as oil prices fell again on the view that Chinese demand will remain muted, and as some major oil bulls, including Goldman Sachs, have revised down their outlook for oil prices.

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.