Stocks extended their rally on Monday and bond yields continued lower after Friday's weaker than expected employment report, which renewed hopes for Federal Reserve rate cuts this year.

The Dow Jones industrial average gained 0.5 percent, the S&P 500 rose 1.0 percent, and the Nasdaq advanced by 1.2 percent, with the indexes ending at the day's highs. Bond yields declined while the dollar and oil prices gained.

Equity sentiment has been bolstered by good quarterly results from key megacaps and the view that earnings have widely been coming in strong, leaving the market positioned to rebound after its losses in April.

Growth stocks outperformed value Monday with a boost from lower rates. Cautious comments from New York Fed President John Williams and Richmond Fed President Tom Barkin did not have much effect on markets, which are back to pricing in two rate cuts this year.

Best performers included big technology, energy, chipmakers, homebuilders, autos, airlines, apparel, machinery, and insurance. Lagging were pharma, discount stores, health & personal care, steel, trucking, and food & beverages.

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.