Equities perked up Wednesday after two soft days as underlying risk appetite remains firm. The Dow Jones industrial average rose 1.2 percent, the S&P 500 gained 0.9 percent, and the Nasdaq was up 0.5 percent. US Treasury yields declined while the dollar and oil prices rose.

Weakness on Monday and Tuesday was put down in part to portfolio rebalancing at quarter end, which faded by Wednesday. Lower market rates Wednesday provided support with a late boost in US Treasuries after a well-received 7-year note sale, following a very successful 5-year auction on Tuesday. Another plus for markets: Chicago Fed President Austan Goolsbee's comment reaffirming support for three rate cuts in 2024.

Small caps had a good day Wednesday, which bolstered the argument that the rally has broader support than just megacaps and the Magnificent Seven. Best sectors included regional banks, aerospace & defense, airlines, retailers, media, cruise lines, restaurant chains, hospitals and chemicals. Lagging were software, payments, networking and communications services.

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.