More bad economic news from China and rising market interest rates undercut equities for a third consecutive day Wednesday. The Dow industrial average lost 0.5 percent, the S&P 500 fell 0.8 percent, and the Nasdaq declined 1.2 percent. US Treasury yields rose while oil prices and the dollar dropped.

Another surprisingly weak economic indicator from China (downbeat housing prices), more downbeat news from China's property sector, plus Fitch's warning that it may downgrade China's sovereign credit rating soured risk appetite and raised global growth worries at the same time that upbeat US economic performance and hawkish-sounding Federal Open Market Committee meeting minutes renewed concern that inflation remains problematic and US rates may head higher.

Among sectors, only defensives including utilities outperformed while leading to the downside were communications services, real estate, health care, and consumer discretionary. On the technical side, the S&P 500 failure in the morning to break above 4500 appeared to trigger selling.

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.