Equities slipped Monday as bond yields rebounded as many traders felt the market had gotten carried away with rate cut hopes last week. The Dow Jones industrial average eased 0.1 percent, the S&P 500 declined 0.5 percent, and the Nasdaq fell 0.8 percent. The dollar and oil prices fell while US Treasury yields rose.

As of Friday, fed funds futures were pricing in 123 basis points of rate cuts in 2024 as investors have seized on signs of slowing inflation and economic activity to support expectations for active rate cuts next year. That figure was pared to 113 basis points late Monday, a still aggressive policy turnaround.

Megacaps saw significant profit-taking on last week's gains, and that in turn depressed the major averages. The broader market fared better as money rotated out of megacaps into under-performing sectors including airlines and other consumer-oriented stocks like retail and homebuilders.

Among sectors, consumer staples, health care, real estate, and utilities outperformed while lagging were technology, consumer discretionary, communications services, energy, and materials.

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.