Federal Reserve Chair Jerome Powell's remark that the Fed need not be in a hurry to cut rates undercut equities late Thursday. The Dow Jones industrial average lost 0.5 percent while the S&P 500 and the Nasdaq both lost 0.6 percent. In a reversal of their recent tendency, US Treasury yields rose in short and medium maturities and fell at the long end. The dollar and oil prices rose.

Stocks were already on the defensive in the morning after the market disliked the latest producer price index report, which prompted many forecasters to raise slightly their estimates for the Fed's favored inflation measure, the personal consumption expenditures price index. The market also took note of lower than expected jobless claims in the latest week. Markets have downgraded expectations for Fed rate cuts next year although most forecasters still look for a 25 basis point rate cut in December.

Bond investors also appear to be reacting bearishly to calls from Fox News and other elements of the Republican right for the Trump administration to curb the independence of the Fed by forcing Powell and other Fed officials to resign.

Among stock sectors, best were consumer staples, utilities and information technology. Lagging were communications services, materials, industrials, health care and consumer discretionary. Tesla and other stocks that have run up on the Trump trade faced more profit-taking pressure.

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.