Equities rallied as market interest rates dropped Tuesday after an inflation report that suggesting inflation is cooling faster than most analysts expected.

The Dow Jones industrial average rose 1.4 percent, the S&P 500 gained 1.9 percent, and the Nasdaq rallied 2.4 percent. US Treasury yields sank more than 20 basis points at the short end after many investors concluded Federal Reserve rate cuts are coming as soon as May. The dollar and oil prices rose.

Stock gains were across the board. Best performers included megacap-led sectors including communications services, consumer discretionary, and technology. Other leaders included real estate, materials, and utilities.

Consumer discretionary shares got a lift on the view that consumers will spend more as price pressures ease. Homebuilders outperformed on the better interest rate outlook. Airlines, banks, asset managers, and retailers had a great day.

Among companies in the news, Home Depot rose on a profits beat, and Snap shares advanced on news of a tie-up with Amazon. Tesla rallied on news it would raise prices in China.

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.