Bank worries and more weak Chinese economic indicators combined to whack equities Tuesday. The Dow industrial average lost 1.0 percent, the S&P 500 fell 1.2 percent, and the Nasdaq declined 1.1 percent. US Treasury yields declined at the short end and rose at the long end. Oil prices and the dollar dropped.

Losses were nearly across the board with an initial spur from news that Chinese industrial production, retail sales, and fixed investment all missed expectations in July. This continued a run of surprisingly bad news from China and concern that the policy response has been lacking. Oil prices and commodity stocks suffered in particular from the China news.

Bank stocks dropped on a warning from Fitch Ratings that it may downgrade more US banks. Meanwhile, hotter than expected US retail sales figures renewed concern that hopes for inflation to continue declining may be overdone.

Among sectors, worst were energy, financials, materials, and real estate, while health care and information technology held up best.

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.