More selling in megacaps, especially big technology shares, undercut the equities market Thursday after a similar pattern Wednesday. The Dow Jones industrial average lost 1.3 percent, the S&P 500 fell 0.8 percent and the Nasdaq declined 0.7 percent. Bond yields rose while the dollar and oil prices slipped.

Dip-buying in the morning in stocks like semiconductors and big momentum plays faltered quickly and gave way to losses through the afternoon. Chipmakers including Taiwan's TSMC suffered a double-whammy of news pointing to tightening restrictions on sales to China from the Biden administration, and fears about the U.S. commitment to Taiwan as former President Trump is favored to return to power.

Rotation out of growth and megacap sectors into value, cyclicals and smaller companies continued Thursday, as has been evident this week. The move gathered momentum with Thursday's unexpected jump in jobless claims, which underscored concerns voiced by Federal Reserve officials about the slowing labor market, and depressed market interest rates. Some consumer stocks including restaurants and retailers came under pressure Thursday on concern about weakening discretionary consumption, a trend flagged in Wednesday's beige book report.

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.