Equities bounced back Monday in a broad-based rally as investors were relieved that the war between Israel and Hamas has not yet broadened or escalated. The Dow Jones industrial average gained 0.9 percent, the S&P 500 rose 1.1 percent, and the Nasdaq advanced by 1.2 percent. US Treasury yields and the dollar rose while oil prices slipped.

Markets also appeared hopeful that the positive start to the quarterly earnings season would continue. News of an additional injection of liquidity from the People's Bank of China was another positive for risk appetite. Stock bulls remain fixed on recent selected Federal Reserve comments, reiterated Monday by Philadelphia Fed President Patrick Harker, that rates have risen enough.

Among sectors, best were consumer discretionary, consumer staples, materials, industrials, financials and health care. Oil stocks suffered as oil prices fell back as traders evidently expect US-led diplomacy to bear fruit in the Mideast conflict.

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.