Rising bond yields dampened equities Tuesday but trading was limited and lacking impetus on a quiet macro news day. The major indexes recovered from the day's lows to end nearly flat even as declining shares slightly outpaced rising shares. The Dow Jones industrial average ended flat, the S&P 500 eased 0.1 percent and the Nasdaq was up 0.2 percent. Bond yields, oil prices and the trade-weighted dollar index all rose.

A shift in market expectations to favor a Republican sweep of Congress and the White House has been a distinct negative for bonds as investors see this outcome as more likely to mean more spending, more inflation and fewer rate cuts from the Federal Reserve. The market has been focusing more on rising sovereign borrowing as a global factor. At the same time, concern has increased about possible loss of disinflation momentum after the latest US consumer price report. The benchmark US Treasury 10-year note yield is now up nearly 60 basis points from its Sept. 24 low, shortly after the last Fed policy meeting.

Among sectors, laggards included truck manufacturers after disappointing results from Paccar; aerospace & defense after earnings misses from Lockheed Martin and GE Aerospace; plus auto parts, retailers, homebuilders and telecom. Microsoft had a good day on a mixed day for megacaps. Best performers included energy, banks, tobacco and railroads.

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.