Equities were flat to better Wednesday in muted trading after Tuesday's rally on favorable inflation news. The Dow Jones industrial average gained 0.6 percent, the S&P 500 rose 0.4 percent, and the Nasdaq was flat. Bond yields mostly rose, the dollar declined, and oil prices retreated.

Wednesday's consumer price index figures matched expectations and accorded with Tuesday's lower than expected producer price figures. The reports bolstered the view that the disinflationary trend is well established and the Federal Reserve is set to start a rate cut cycle next month. Separately, Chicago Fed President Austan Goolsbee was quoted as saying the Fed needs to avoid waiting too long to cut rates given the weakening labor market and the lagged effect of any policy change.

Investors are awaiting retail sales report due Thursday along with quarterly results from Walmart, regarded as another barometer of consumer spending.

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.