Stocks advanced for a third consecutive day Tuesday to pare August's losses with broad-based gains after soft economic data that investors hoped would help interest rates peak.

The Dow industrial average gained 0.9 percent, the S&P 500 advanced 1.5 percent, and the Nasdaq rallied 1.7 percent. Megacaps led the way as US Treasury yields declined while the dollar and crude oil prices gained.

News that job openings dropped way more than expected, which suggested a much slower labor market, and news that consumer sentiment dropped unexpectedly too, boosted investor risk appetite as investors bet the Federal Reserve is now poised to end its rate hike campaign. More steps from China overnight to spur its flagging economy and markets added to the supportive narrative. The S&P 500's move above its 50-day moving average around 4460 was another plus.

Tesla, Invidia, Alphabet, and other megacap growth stocks led the way higher. Among sectors, best were communications services, consumer discretionary, information technology, financials, materials, and real estate.

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.