Equities recovered to end higher Friday after an initial drop on Federal Reserve Chair Jerome Powell's Jackson Hole speech. The market initially viewed it as hawkish, as investors focused on his warning that rates may need to rise, but on second thought it seemed more balanced and cautious about the prospect of more rate increases. The speech ended with a pledge to proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data."

The Dow industrial average and the S&P 500 both rose 0.7 percent and the Nasdaq gained 0.9 percent. US Treasury yields rose but receded from initial highs. The dollar was mostly higher, and oil prices gained. Despite the equity market uptick, headed into next week the market has a big challenge coping with upward pressure on bond yields.

Friday's recovery was paced by a rebound in megacaps, with Apple and Amazon ending up more than 1 percent after being down a similar amount at midday. Among sectors, energy fared best as oil prices advanced. Other leaders included travel & leisure, consumer staples, software, utilities, and pharma. Homebuilders, department stores, social media, and precious metals lagged.

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.