Equities hovered in narrow ranges Tuesday with a better showing for megacaps helping the major averages record modest gains. The Dow Jones industrial average firmed 0.4 percent, the S&P 500 gained 0.7 percent, and the Nasdaq rose 0.5 percent. US Treasury yields rose while the dollar and oil prices declined.

Activity was limited as the market awaits the Federal Reserve policy announcement and details on the US Treasury refunding announcement on Wednesday. Not much news is expected from the Fed announcement, while attention remains focused on surging Treasury borrowing, which are reflected in rising bond yields. On the positive side, investors have reacted favorably as the Israel-Hamas war has not yet widened or led to oil supply disruptions.

Notable earnings news came in on the bearish side Tuesday with misses from Pfizer and Amgen, and Caterpillar off on news of rising dealer inventories. Big technology shares have been coming in strong, allowing the market to stick to its strong secular growth theme

Among sectors, best performers Tuesday included big tech, homebuilders, chipmakers, networking/communications, steel, health care, and aerospace & defense. On the downside, big pharma, agriculture machinery, energy, airlines, and fertilizers 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.