Equities were broadly higher Wednesday with growth stocks outperforming after investors ratcheted up expectations for a Federal Reserve rate cut next week. The Dow declined 0.2 percent while the S&P 500 gained 0.8 percent and the Nasdaq advanced 1.8 percent. US Treasury yields, the dollar and oil prices all rose.

Big technology shares and momentum plays led the winners as an as-expected consumer price index report reinforced expectations for a 25 basis point rate cut next week, which spurred a short-lived decline in bond yields. Stocks and bonds moved up on relief the CPI was not worse than expected. Investors evidently liked the shelter components of the report which suggested progress in this key segment. Yields moved back up later as the bond traders marked down prices headed into the day's 10-year note auction and Thursday's long bond sale.

Megacaps including Meta, Alphabet, Amazon, and Tesla were among the day's top performers, plus chipmakers including Nvidia, Broadcom and Samsung. In keeping with the strength in megacaps, best sectors included communications services, technology and consumer discretionary while lagging were materials, utilities, health care 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.