Bullish company news lifted equities Tuesday, including upbeat earnings from Morgan Stanley, Bank of America, and BNY Mellon. The Dow industrial average rallied 1.1 percent, the S&P 500 rose 0.7 percent, and the Nasdaq was up 0.8 percent. US Treasury yields were mostly lower, oil prices rose, and the dollar was mixed.

Big technology stocks had a great day, paced by Microsoft, up sharply after providing its latest artificial intelligence update. Strong results from Morgan Stanley lifted investment banks, including Goldman Sachs, which rallied ahead of its earnings due on Wednesday. Strong results at Schwab boosted brokers.

Health care stocks outperformed paced by UnitedHealth, which rose on an analyst upgrade. Pharma was lifted by bullish earnings from Novartis. Small caps had a good day, a sign that bullish sentiment is widening. On the downside, defensive sectors lagged, including utilities, real estate, grocery stores, beverages, and waste haulers.

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.