Stocks were narrowly mixed Tuesday but underlying sentiment remained positive after good gains last week and given rising expectations for aggressive Federal Reserve rate cuts. The Dow Jones industrial average eased 0.1 percent, the S&P 500 firmed 0.1 percent and the Nasdaq edged up 0.2 percent. Bond yields, the dollar and oil prices advanced.

Economic reports released Tuesday including somewhat better than expected retail sales and industrial production figures bolstered the view that the economy is headed for a soft landing and did not alter expectations which favor a 50 basis point Fed rate cut on Wednesday. Activity Tuesday was limited by caution ahead of the Fed meeting.

Among sectors, best were financials, energy, industrials, consumer discretionary, communications services, and information technology, with the latter lifted by a rally at Microsoft on news of a big share buyback. Lagging were health care, consumer staples and real estate.

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.