Rising bond yields hit stocks Wednesday along with profit-taking after the Nasdaq made a new high Tuesday. The Dow Jones industrial average sank 1.1 percent, the S&P 500 slipped 0.7 percent, and the Nasdaq declined 0.6 percent after setting a new high Tuesday. Bond yields rose while the dollar and oil prices slipped.

On a quiet day for economic news, investors continued to recoil from comments from Federal Reserve officials perceived as reducing prospects for rate cuts this year. Risk appetite took a knock after Minneapolis Fed President Neel Kashkari Tuesday said he would need to see many months of improving inflation data before he would consider rate cuts, and that rate hikes remain on the table.

Bond yields were also pushed higher as the market appeared to have trouble absorbing a batch of Treasury auctions crammed into the first part of the week. Wednesday's 7-year note drew tepid demand after similar results in Tuesday's 2- and 5-year note sales.

Rising bond yields spurred broad selling in stocks as it hit risk assets generally, including oil prices. West Texas intermediate crude fell back below $80 a barrel after rising about 3 percent on Tuesday.

Profit-taking was at work too as chip stocks including Advanced Micro Devices and Intel fell back after breaking higher Tuesday. Among sectors, worst were energy, materials, industrials, health care, financials, industrials, utilities, and real estate. Select megacaps rebounded late to limit index declines.

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.