Equities retreated Tuesday as the market appeared due for consolidation after its huge runup on the Trump trade. The Dow Jones industrial average lost 0.9 percent, the S&P 500 eased 0.3 percent and the Nasdaq eased 0.1 percent. US Treasury yields surged, the dollar rose, and oil prices edged up.

Rising bond yields were another trigger for a correction in equities as bond markets increasingly anticipate higher inflation with Trump's economic plans. The bond market also reacted badly to Minneapolis Fed President Neel Kashkari's comment that that upside inflation surprises between now and the December FOMC meeting could give policy-makers reason to leave rates unchanged then.

Talk of a bigger than expected jump in consumer prices on Wednesday added to the negative momentum in bonds. Expectations for CPI center on a rise of 0.2 percent overall and 0.3 percent for the core. Analyst comments focus on concern that shelter costs and used autos could skew the number higher.

Sectors that benefitted most from the Trump rally since Wednesday lagged Tuesday, especially small caps. Tesla was a big decliner after its extraordinary rally. Other laggards included homebuilders, autos, chemicals, industrial metals, biotech, airlines, aerospace & defense, utilities, and real estate investment trusts. Holding up best were megacaps, especially big technology, plus insurance, apparel, cruise lines, beverages and entertainment.

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.