Most stocks suffered Tuesday after President-elect Trump's latest threat to raise tariffs on imports from Mexico, Canada and China but a better showing for selected megacaps bolstered the major indexes. The Dow firmed 0.3 percent while the S&P 500 and the Nasdaq both gained 0.6 percent. US Treasury yields were mixed with shorter maturities lower and longer maturities flat to higher. The dollar rose, and oil prices slipped.

The market sold off early as Trump's threat to lift tariffs on Canadian and Mexican goods by an additional 25 percent and on Chinese goods by an additional 10 percent renewed concerns about inflation and disruptions likely to flow from the new administration's policies. But the market appeared to brush off the tariff threat as the day progressed, and weak economic data, including a surprising drop in new home sales, bolstered the bond market, which helped equity sentiment recover. Consumer confidence data came in largely as expected, along with news of a big drop in consumer inflation expectations.

A batch of disappointing quarterly results from retailers including Abercrombie & Fitch, Best Buy, and Kohl's attracted bearish attention. Biotech Amgen dropped after releasing negative clinical results on its weight loss medicine. Among sectors, energy and materials lagged while best performers included communications services, information technology and consumer discretionary.

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.