Equities were under pressure for a second day as investors remained inclined to take profits after the market's run to record highs this year. Technology stocks which have led the rally led the decliners on Friday. Index heavyweight Microsoft lagged, as did Amazon, Cisco, and Salesforce.

The week's hotter than expected consumer and producer price reports fed concerns that the market has been over-aggressive about expectations for multiple rate cuts this year. Forecasters now appear divided about the prospect of an initial rate cut in June or July. Investors are pricing in two or three rate cuts in 2024, more more in line with the Fed's own projections, rather than the five or six they looked for late last year.

Worst performers Friday included cosmetics after Ulta reported disappointing earnings. Among tech stocks, internet, software and chipmakers had a bad day. Adobe was a notable loser after disappointing guidance. Travel & leisure, credit cards, beverages and discount chain stores lagged too.

On the positive side, small caps outperformed. Among sectors, best were autos, biotech, grocery stores, machinery and industrial metals.

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.