Surprisingly upbeat US economic data spurred risk-on sentiment to boost equities Tuesday. The Dow industrial average rose 0.6 percent; the S&P 500 gained 1.2 percent, and the Nasdaq was up 1.7 percent. US Treasury yields and the dollar rose while oil prices fell.

Some traders saw value in stocks that had fallen back for several days, and buyers who feared missing out on the rally stepped in as the market built on its gains through the day. Meanwhile, big upside beats on durable goods orders, new home sales, and consumer confidence played into hopes for a soft landing, even as it confirmed expectations for more US rate increases starting in July. A favorable reading on inflation expectations in the consumer confidence report bolstered hopes for slowing inflation.

Small- and mid-caps continued to out-perform, with regional banks leading the winners. Among sectors, consumer discretionary, technology, industrials, and communications services led to the upside. Among Dow stocks, best were Intel, Nike, and Home Depot. Housing stocks outperformed on surprising strength in home sales data. On the downside, health care lagged. Walgreens Boots was a notable decliner after a profits warning.

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.