Equities slipped again Wednesday as many investors had the sense the market remained overbought after five weeks of gains. Risk appetite also suffered from Federal Reserve Chair Jerome Powell's reiteration that interest rates are probably headed higher unless inflation calms down. The Dow industrials declined 0.3 percent, the S&P 500 lost 0.5 percent, and the Nasdaq was down 1.2 percent. US Treasury yields and oil prices rose while the dollar was mostly higher.

Megacaps lagged as they faced heavier profit-taking pressure after leading the market's advance over the last month. Rising bond yields on the Powell comments weighed on megacaps, paced by a nasty 5.5 percent drop in Tesla following a downgrade from Barclays. Microsoft and Alphabet lost about 1-2 percent.

Among sectors, worst were technology, consumer discretionary, and communication services, reflecting the poor showing for megacaps. Holding up best were health care, energy, industrials, materials, and utilities.

In the day's main economic news, Fed Chair Powell portrayed last Wednesday's decision to leave rates unchanged as a chance for the FOMC to take its time to sort out economic and financial uncertainties and to give past rate hikes, plus actual and anticipated bank credit tightening a chance to work. If inflation fails to moderate further as hoped, the FOMC will stand ready to raise rates further, he made clear.

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.