Equities retreated on profit-taking Friday headed into the long weekend after a week of gains, with a spur from rising interest rates. The Dow industrials declined 0.3 percent, the S&P 500 lost 0.4 percent, and the Nasdaq was off 0.7 percent. US Treasury yields and oil prices rose while the dollar was mostly lower.

Bond yields rose as Federal Reserve officials emerged from their quiet period apparently determined to convince financial markets that the fight against inflation is not won. Richmond Fed President Tom Barkin attracted attention with his comments that he would favor more rate increases if inflation doesn't perform, and that price pressures have been stubbornly persistent.

A selloff in megacaps under pressure from rising bond yields weighed on the major averages. Amazon and Alphabet were among the worst performers. The broader market actually fared better, especially consumer staples and utilities. Lagging were communications services, technology, and consumer discretionary.

In economic news, US consumer sentiment came in much stronger than expected, which played into the resilient consumer narrative. US short-term inflation expectations dropped, which comforted bulls who are hoping for a soft landing and no more rate hikes.

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.