Equities edged up Tuesday with a boost from Federal Reserve Governor Christopher Waller's comment that rates could be cut if disinflation continues for several more months. The Dow Jones industrial average gained 0.2 percent, the S&P 500 firmed 0.1 percent, and the Nasdaq was up 0.3 percent. US Treasury yields declined while the dollar and oil prices rose.

Waller made the comment around 10:30 am ET, which generated a flurry of buying. Waller also said he was more confident policy is well positioned to stabilize the economy. Buying on the Waller comments faded as the day went on, and consolidative pressures reasserted themselves in the wake of strong November gains. Fed Governor Michelle Bowman's comment later that she would favor another rate hike if inflation figures disappoint tended to offset the favorable effect of Waller's remark but markets are increasingly pricing in a rate cut in May.

Sectors were mixed with health care, industrials, and real estate lagging. Outperforming were communications services, technology, consumer discretionary, and consumer staples.

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.