Equities were mostly weaker Tuesday amid risk-off pressures due to worries about the Middle East conflict plus profit-taking in heavily weighted megacaps. The Dow Jones industrial average firmed 0.1 percent, the S&P 500 percent declined 0.6 percent, and the Nasdaq fell 1.6 percent. US Treasury yields rose while oil prices and the dollar declined.

Fear of widening conflict in the Middle East followed news that Iran deployed a warship to the Red Sea after the U.S. Navy destroyed boats belonging to Houthi rebels over the weekend. The risk-off mood in financial markets forced oil prices lower despite the threat of disrupted supplies from the Mideast. Maersk, the shipping giant, said it would reroute its vessels to avoid the Red Sea after one of its ships came under attack over the weekend.

The major indexes were relatively resilient on strength in defensive sectors and other segments that underperformed in 2023 including consumer staples, energy, and utilities. Health care showed relative strength Tuesday after lagging in 2023. Worst off Tuesday were consumer discretionary, information technology, and information services, reflecting heavy profit-taking in megacaps.

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.