Another encouraging inflation report and positive company news lifted equities Thursday. The Dow industrial average firmed 0.1 percent, the S&P 500 gained 0.9 percent, and the Nasdaq rose 1.6 percent. US Treasury yields declined while the dollar and oil prices rose.

Lower than expected producer price figures on top of Wednesday's better than expected consumer price report added to the view that inflation is receding, and interest rates are headed down soon. Separately, lower than expected jobless claims figures bolstered expectations that have been rising lately for the US economy to avoid recession even as inflation falls.

Megacaps led the advance but the rally was broad-based for a second day as bullish sentiment builds. Best sectors included communications services, technology, and consumer discretionary. Lagging were health care and energy.

Better than expected quarterly results from Pepsico and Delta Airlines helped the earnings season get off to a strong start and added to the bullish mood. Alphabet advanced on its latest updates about its artificial intelligence offering. Meta got a lift from an upgrade at TD Cowen. Amazon advanced for a second day on news of favorable results in its Prime Day sales.

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.