Risk-on sentiment carried over Friday from Thursday to lift equities though major averages ended down from midafternoon highs. Leading for a second day were stocks that have tended to lag lately, including cyclicals and small and medium caps, as rotation out of momentum plays and growth stocks continued. The Dow Jones industrial average and the S&P 500 both rose 0.6 percent and the Nasdaq gained 0.5 percent. Bond yields and oil prices declined while the dollar rose.

Magnificent Seven megacaps managed to rebound after Thursday's weakness even as growth stocks generally were out of favor. Market interest rates extended Thursday's declines despite a hotter than expected producer price report, which evidently did not shake the market's confidence that disinflation is well under way after Thursday's better than expected consumer price reading. Investors also noted consumer sentiment and consumer inflation expectations figures that showed unexpected declines.

Banks sold off after underwhelming quarterly results from Wells Fargo, Citigroup and JP Morgan to start off the earnings season. Among sectors, best performers included autos, travel & leisure, managed care, homebuilders and other housing-related stocks, steel, chemicals, machinery, trucking and oil servicers. Lagging, in addition to banks were airlines, big oil, refiners, precious metals, aluminum, and grocery stores.

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.