Equities edged up Monday with most stocks higher as the market awaited US inflation figures and the start of corporate earnings season. The Dow industrial average rose 0.6 percent while the S&P 500 and the Nasdaq both firmed 0.2 percent. US Treasury yields, the dollar, and oil prices all declined.

Investors remain hopeful that consumer and producer price reports due on Wednesday and Thursday will show more progress on inflation to allow the Federal Reserve room to leave rates steady after one or two more rate hikes. Comments from a pair of non-voting Fed officials Monday repeated the line that more rate hikes are coming and policy remains data dependent.

Weaker than expected Chinese inflation figures overnight biased interest rates lower Monday and raised expectations for more Chinese government stimulus. Meanwhile, investors are awaiting the start of US earnings season with sentiment bolstered by investment banks calling for earnings to rebound through year end after bottoming in the second quarter.

Declines in megacaps weighed on the major averages with Apple, Amazon, and Microsoft lagging after Nasdaq announced a special rebalancing to trim the weight of the top seven Nasdaq 100 stocks. Cyclicals outperformed Monday, led by industrials, energy, and financials.

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.