Inflation worries hit equities hard Tuesday after a hotter-than-expected consumer price report. The Dow Jones industrial average and the S&P 500 both dropped 1.4 percent and the Nasdaq lost 1.6 percent. US Treasury yields surged, the dollar fell, and oil prices rose.

Equities saw selling nearly across the board after disappointing CPI figures pushed up market interest rates and undercut hopes for Federal Reserve rate cuts.

Major stock indexes were ending at the day's lows rather than showing signs of dip-buying and US Treasuries extended their losses. Some investors evidently saw equities as overdone to the upside and due for a correction.

Hardest hit sectors included real estate, which suffers from rising mortgage rates, along with growth sectors like information technology, consumer discretionary, and communications services, which are especially sensitive to financing costs. Other especially weak sectors included utilities, materials, financials, and industrials.

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.