Equities slipped Wednesday as profit-taking on last year's gains continued for a second day to start 2024. The Dow Jones industrial average and the S&P 500 percent both declined 0.8 percent and the Nasdaq fell 1.2 percent. US Treasury yields and the dollar declined while oil prices jumped.

A rebound in oil prices after Tuesday's drop weighed on risk appetite as did minutes from the Federal Reserve's last policy meeting that seemed less dovish than the market expected as officials retained the option to raise rates if needed. Bond yields were initially higher to depress equities before declining later. Expectations for Fed rate cuts next year were scaled back slightly.

Most stock sectors sold off Wednesday with real estate and consumer discretionary shares off most with losses of about 2 percent. Energy stocks outperformed with rising oil prices amid concern over Iranian military plans in the Red Sea and the threat of a wider Middle East conflict and supply disruptions.

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.